📿 [Analysis] How I Lost My Faith in Private Blockchains – Angus Champion de Crespigny

There are four challenges in applying permissioned blockchains in industry: definition, differentiation, process impact, and necessity.

• Definition – The difficulty in describing the challenges with permissioned blockchains begins with the difficulty of defining what it is. And if it can't be differentiated in the definition, then it shouldn't be considered different at all.
• Differentiation – The interesting thing is most blockchain features are achievable with a distributed database. The key difference is that blockchains are specifically designed to prevent central governance. This comes at a cost of efficiency and speed, however. The key question to ask, is why enterprises would prefer to sacrifice many measurable metrics and opt instead for deploying a technology that is harder to administer?
• Process Impact – Businesses conduct transactions with other entities all the time, and they establish contracts for these purposes. A blockchain is not going to remove the need for a contract and solve the problem of "working with those whom you do not trust." Without knowing the shape of that future, it is a significant technology investment and sacrifice onto a closed network that may or may not pay off.
• Necessity – Coordination is a human problem, not a technology problem. By the time coordination with all involved parties has taken place, the major problem is typically already solved. Consequently, additional technology is not needed, and certainly not technology that's incredibly costly in its enforcement of that goal.

What much of this comes down to, is the fact that you can never be half decentralized: any level of centralization will end up with the system coalescing around that central point of management. Institutions and individuals should be evaluating permissioned blockchains like any other technology. Smart businesses will evaluate whether their problem can be solved and at lower cost on a database or a public blockchain, and press those selling the technology for a demonstrable burden of proof.