The Difference between an ‘Open-Community’ and ‘Closed-Network’ Blockchain

Beginner’s Guide / 06.09.2020

R3 is a consortium of about 200 firms coming together to research and develop distributed database models, somewhere along Bitcoin’s lines. Usually, they receive a lot of heat as they say they are researching a corporate or private model of “Blockchain” but are developing a version of Distributed Ledger Technology (DLT). This debate between a Public Blockchain and a Private Blockchain (yes, it’s an oxymoron) is the center of great distress.

Another such debate that hasn’t reached the mainstream yet, as it falls under the Public Blockchain category, is the difference between an Open-community Blockchain vs. a Closed-Environment Blockchain. You can think of Bitcoin being an Open-community ecosystem and Ethereum being a member of the other side of the spectrum.

Open Community Blockchains

A blockchain application that is open for all participants to read, audit, edit, and argue about the blockchain network’s internal functioning is a public blockchain. A public blockchain is relevant mostly because they function as autonomous entities that are not dependent on established organizations to proctor the network’s day-to-day functioning. A public blockchain is actively used, illustrated, and developed by network participants that back the idea of an open-source, delegate-free, secure network that can be readily used. Customization is an embedded feature of such a network, as all code is open for anyone to use, copy or replace.

Bitcoin, Monero, Litecoin, Dogecoin are just a few of the examples.

Closed Environment Blockchains

A closed-environment blockchain is a network established on the trust and merit of legitimate organizations or participants, capable of handling the responsibility and authenticity that needs to be provided on the network. They are the sole-authorities taking care of the network’s growth by actively looking after the execution and relay, and at the same time, checking for internal threats that may arise to be malicious actors working against the network.

Difference between Open-Community and Closed-Network Blockchains

Public ‘open-community’ BlockchainsPublic ‘closed-network’ Blockchains
ConsensusAn open networked blockchain majorly depends on the users or delegated participants appointed by the users to reach consensus about various network decisions.A closed-networked blockchain readily reaches a consensus as all participants know each other through distributed delegation rights.
Source CodeRead, audited, and altered by the entire network.Can be read by the network but audited and altered by delegated maintainers
DevelopmentDeveloped for open-source, free use for participantsCan be developed for commercial use as well as limited open-source use
Community participationAn active community of participants is readily volunteering for the betterment of the network.The delegated responsible participants are given the right to make changes to the source code in the best interest of the community
Information processingRelaying information or transaction on the network is relatively open, and any network participant can do so without much. Although the open nature makes it inefficient and time-consumingThe transactional capabilities can reside in the hands of the delegate responsible for maintaining the network. Information can even be censored and restricted, depending on the governance of the network.
Common VisionThe Vision can change through time, mostly due to the relatively high turnover of people working for the open-source community. Bitcoin started as an experiment by the cyberpunk group and didn’t take long to become a prospect for the future of money.A common vision is set beforehand to ensure all developers and managers can reach a common goal. The founding vision of Ethereum was to develop a Globally distributed computer, and it is well on its way to do so.
Remuneration and IncentivizationThe only incentives that the users of an open network could receive are the benefits of using such a network and the remuneration that the network has agreed upon for such participation.As it could be deployed for commercial use, the institutions and participants are incentivized to make the user experience better and profitable actively.
End-user experienceA user on the open-community network has to be constantly updated with the network’s functioning to be a part of the ongoing changes and suggestions that are being discussed.A user on the network does not necessarily need to be aware of the constant dialogues that are going on between the maintainers. The maintainers are responsible for making a network that requires minimum user participation and maximum user utility.
Sudarshan M is a long time crypto-enthusiast. Pulled in by bitcoin early on, it did not take long for Sudarshan to divert all of his academic attention from business studies to blockchain by doing his Masters and eventually pursuing his PhD in the subject.