To understand what a consortium blockchain is, or, in other words, what kind of blockchain implementation consortiums need, let's check out an example. Banks want to build a blockchain to make money transfers easier, faster, and cheaper. In this case, here are the things they need:
- Speed: They need a blockchain network that can confirm transactions in near-real time. Currently, the Ethereum blockchain network block time is 12 seconds, and clients usually wait for a couple of minutes before confirming a transaction.
- Permissioned: They want the blockchain to be permissioned. Permissioning itself means various different things. For example, permissioning can include taking permission to join the network, it can include taking permission to be able to create blocks, it can also be taking permission to be able to send specific transactions and so on.
- Security: PoW isn't secure enough for private networks as there is a limited number of participants; therefore, there isn't enough hash power produced to make it secure. So, there is a need for a consensus protocol that can keep the blockchain secure and immutable.
- Privacy: Although the network is private, there is still a need for privacy in the network itself. There are two kinds of privacy:
- Identity privacy: Identity privacy is the act of making the identity untraceable. The solution we saw earlier to gain identity privacy was to use multiple Ethereum account addresses. But if multiple Ethereum accounts are used, then smart contracts will fail ownership validation as there is no way to know whether all of these accounts actually belong to the same user.
- Data privacy: Sometimes, we don't want the data to be visible to all the nodes in the network, but to specific nodes only.
Overall, in this chapter, we will learn how to solve these issues in Ethereum.