Note
If you are new to the blockchain technology, taking our Introduction to Blockchain Technology self-paced course is highly recommended. Also, for a comprehensive coverage of blockchain development in Ethereum or mastering Solidity programming, taking our below self paced courses is highly recommended:
Recap
In our previous series,
- Review of Infura for Ethereum Development
- Review of Infura Ethereum API
- How to Use Remix with Infura for Ethereum Development
- How Ethereum Client API Works
- How Ethereum IPFS Storage Works
- How to Install and Start Ethereum IPFS Storage
- How to Run Ethereum IPFS Storage
- How to Work with Ethereum Swarm Storage
- How to Install Ethereum Swarm Storage
- How to Handle Ethereum Messages with Whisper
- Review of Popular Ethereum Smart Contract Libraries
In this article series, we will move our focus to Ethereum private chains. For developers, private blockchains are set up for testing purposes. Private chains have advantages over public blockchains in testing. For example, there is no need for nodes syncing or obtaining test ether, as you are the only user, and there are no other smart contracts. But the disadvantage is that the testing won’t be as good as real scenarios in a public blockchain, in the absence of other nodes, users, and contracts.
As blockchain technology has matured, enterprises have started to adopt the technology for their own use cases. It’s important for you to understand not only the public blockchains but also the private and permissioned ones. Developers should know how to set up their own blockchains.
We will have a look at the difference between public and private blockchains, and take you through the steps for setting up a private blockchain using Ethereum. We will also look at the options flags that we can use with new chains. At the end of this article series, we will provide a brief overview of popular private blockchains, including R3 Corda, Hyperledger Sawtooth, and Quorum, and their usages in the industry. The series will also explain private blockchains in production usages.
We will cover the following topics in this series:
- Understanding private and permissioned blockchains
- Setting up a local private blockchain
- Using optional flags with new chains
- Introducing the popular private blockchains in the industry
- Private blockchains in production usages
Technical requirements
To set up a local blockchain network, you will need one or more local computers connected through the local network. The steps demonstrated in this series have been implemented with a Mac machine. It will work almost the same on the Ubuntu server. You will also need to decide which Ethereum client to use. We will use Go-ethereum, the popular Ethereum client from the Ethereum foundation. If you choose a different Ethereum client implementation, follow the detailed instructions on its website, even if it appears to be very similar to Go-ethereum.
There are multiple options available for you to install Go-ethereum or Geth. The simplest way is to complete the following three steps:
- Download Geth directly from the Geth site: https://geth.ethereum.org/downloads.
- Extract the tar file and store the executable file in your local directory.
- Add the directory to your system path.
One-to-One Live Blockchain Classes
Coding Bootcamps school offers One-to-One Live Blockchain Classes for Beginners.
If you intend to build Go-ethereum from source, the following applications will be required. For detailed instructions, you should check the geth site: https://geth.ethereum.org/install-and-build/Installing-Geth#build-it-from-source-code:
- Git Xcode
- Homebrew
If you plan to create any miner nodes, make sure you have enough RAM set aside for mining. Now that we understand the concept of private and permissioned blockchains, we will introduce how to create a local private blockchain without mining and then with mining.
Understanding a private and permissioned blockchain
So far, we have extensively discussed Bitcoin and Ethereum as public blockchains. With a public blockchain, anyone can become a node of the network and access all the activities inside it. The key challenges for enterprise adoption are privacy and confidentiality.
Enterprises need both of them for legitimate reasons:
- One is that privacy will be enforced by laws and regulations. In Europe, the General Data Protection Regulation (GDPR) is the core of digital privacy legislation. In the US, HIPAA in healthcare and KYC/AML in finance require the business to protect consumer privacy. More importantly, privacy and security in general are competitive advantages for enterprises to gain the trust of and retain their customers.
- The second reason is that all businesses and large enterprises deal with crucial product and services information, which make them competitive on the global market. For this reason, enterprises are more likely to join the private and consortium blockchains to avoid exposing sensitive data and transactions to the public.
A private blockchain is sometimes called a permissioned blockchain, similar to the way that a public blockchain is sometimes categorized as a permissionless blockchain. It can have all the key features we discussed in the public blockchain, including a decentralized peer-to-peer network, distributed ledger, and security through cryptography. The difference between the public and private blockchain lies in who can join the network, and what rights you can get. You can think of a public blockchain as a public park. Anyone can get into the public park. And once in, you can do all kinds of activities, such as jogging or playing, as long as the policies or rules allow them. Joining a private blockchain is like going to someone’s birthday party: you can only join if you’ve been invited.
In a public blockchain, anyone can join the network and access all transactions. Anyone can be the validator to verify the transactions and create the blocks, and the system relies on the economic perspectives (incentives in the Proof-of-Work(PoW) consensus mechanism, and the disincentives in the Proof-of-Stake(PoS) mechanism) to secure the network. On the contrary, in the private blockchain, only selected nodes can participate in the peer-to-peer network and process the transactions. The system relies on the identity of the entities, whether it is a user or a node, to secure the network.
The difference between permissionless and permissioned blockchain lies in the trust of validators. Permissionless blockchains allow everyone to validate transactions, but only selected users can do so in a permissioned blockchain. In other words, a permissioned blockchain doesn’t put its trust in validators.
To help you get a clear picture of the different categories of blockchains, we can summarize the features of blockchains in the following table:
blockchain | Public permissionless | Public permissioned | Private permissionless | Private permissioned |
Read/create transactions | Anyone | Anyone | Restricted | Restricted |
Validate/write transactions | Anyone | Restricted | Anyone | Restricted |
Validator identity | Highly Anonymous | Moderate Anonymous | Identified | Identified |
Trust in validators | Yes | No | Yes | No |
Consensus |
PoW |
PoS |
Federated Byzantine agreement |
Practical Byzantine Fault Tolerance Algorithm /Multisignature |
Require Token | Yes | Yes | No | No |
Speed | Slower | Faster | Faster | Faster |
Energy consumption | Higher | Lower | Lower | Lower |
Projects |
Bitcoin Ethereum Waves | Ethereum after Casper Ripple |
LTO Network MONET |
Hyperledger Fabric R3 Corda Quorum |
Also, as mainstream blockchain categories, blockchain networks are either permissioned or permissionless. The concept of it being private or public is application specific, and not at the network level. It is based on someone’s ability to access the network and also what identification requirements there are. Within those networks, transactions and interactions may be private or public. Whether or not you need privacy or confidentiality is depending on use case. For example, Quorum has tessera nodes for private transactions, Hyperledger has channels for private interactions, and E&Y has nightfall for public Ethereum.
Although Ethereum is launched as a public permissionless blockchain, you can build a local private blockchain with Ethereum too.
In the next article, we will walk you through how to set up a private Ethereum blockchain network.
Next Article
In our next article (How to Set up a Local Private Ethereum Blockchain), we discuss how to set up a local private Ethereum network.
This article is written in collaboration with Brian Wu who is a leading author of “Learn Ethereum: Build your own decentralized applications with Ethereum and smart contracts” book. He has written 7 books on blockchain development.
Resources
Free Webinars on Blockchain
Here is the list of our free webinars that are highly recommended:
- Hyperledger Fabric for system admin versus developers
- How to harness blockchain for environmental and corporate sustainability
- Review of Initial Coin Offering, Security Token Offering and asset tokenization use cases and best practices
- Hyperledger Fabric Deployment on Cloud
- Hyperledger Fabric for entrepreneurship- 21 blockchain business use cases
Free Courses
Here is the list of our 10 free self-paced courses that are highly recommended:
- IT Career Roadmap Explained
- Web Design with Bootstrap
- User Experience Best Practices
- Intro to Search Engine Optimization
- Web Design with WordPress
- Introduction to Drupal CMS
- Intro to Joomla CMS
- Intro to Cybersecurity
- Introduction to Cloud Technology
- Recorded Live Webinars and Classes
Self-Paced Blockchain Courses
If you like to learn more about Hyperledger Fabric, Hyperledger Sawtooth, Ethereum or Corda, taking the following self-paced classes is highly recommended:
- Intro to Blockchain Technology
- Blockchain Management in Hyperledger for System Admins
- Hyperledger Fabric for Developers
- Intro to Blockchain Cybersecurity
- Learn Solidity Programming by Examples
- Introduction to Ethereum Blockchain Development
- Learn Blockchain Dev with Corda R3
- Intro to Hyperledger Sawtooth for System Admins
Live Blockchain Courses
If you want to master Hyperledger Fabric, Ethereum or Corda, taking the following live classes is highly recommended:
- Live and self-paced blockchain development with Ethereum
- Live and self-paced blockchain development with Hyperledger Fabric
- Live and self-paced blockchain development with Corda
- Immersive Blockchain Bootcamp with live and self-paced courses
- Live crash course for learning Ethereum with Solidity
- Live crash course for building DApps with Hyperledger Fabric
- Live crash course for building DApps with Corda
- Live full-stack blockchain development in Hyperledger and Ethereum
Articles and Tutorials on Blockchain Technology
If you like to learn more about blockchain technology and how it works, reading the following articles is highly recommended:
- History and Evolution of Blockchain Technology from Bitcoin
- Overview of Blockchain evolution and phases from Ethereum to Hyperledger
- Comprehensive overview and analysis of blockchain use cases in many industries
- Blockchain Crowdfunding Security Token or Initial Coin Offerings
- A beginner Guide to Blockchain Technology
- How Decentralized Peer-To-Peer Network Works
- How blocks are added to the blockchain
- How Public and Private Keys of Cryptography Work
- What Is A Cryptographic Hash Function
- How Digital Signature Works In Blockchain
- The role and types of consensus mechanism in blockchain
- How Proof-of-Work Consensus Works in Blockchain
- How Proof of Stake Consensus works in Blockchain
Articles and Tutorials on Ethereum and Solidity
If you like to learn more about blockchain development in Ethereum with Solidity, reading the following articles and tutorials is highly recommended:
- Review of Architecture and Components of Ethereum
- Comprehensive Blockchain Ethereum Developer Guide from Beginner to Advance Level
- How to Write Ethereum Smart Contracts with Solidity in 1 hour
- Review of Architecture and Components of Ethereum
- How Ethereum Manages Accounts
- How Ethereum Manages Transactions
- How Smart Contracts Work in Ethereum
- How Ether and Gas Work in Ethereum
- How Ethereum Virtual Machine works
- How address and wallet work in Ethereum
- How mining works in Ethereum
- List of Tools and Technologies in Ethereum Ecosystem
- Review of challenges in distributed systems
- Review of Cap Theorem in Distributed Systems
- Horizontal Scaling versus Vertical Scaling in Distributed Systems
- How to Scale up Ethereum Blockchain Applications
- Review of scaling solutions for Ethereum
- How to Manage Ethereum State Channel with Raiden
- How Plasma Chains Work in Ethereum
- How Sharding and Gasper work in Ethereum
- How Proof-of-Stack Consensus Works in Ethereum
- A roadmap for Implementing Ethereum 2.0
- How to work with Decentralized Data and Content Storage in Ethereum
- How Decentralized Messaging with Whisper Works in Ethereum
- Review of Infura for Ethereum Development
- Review of Infura Ethereum API
- How to Use Remix with Infura for Ethereum Development
- How Ethereum Client API Works
- How Ethereum IPFS Storage Works
- How to Install and Start Ethereum IPFS Storage
- How to Run Ethereum IPFS Storage
- How to Work with Ethereum Swarm Storage
- How to Install Ethereum Swarm Storage
- How to Handle Ethereum Messages with Whisper
- Review of Popular Ethereum Smart Contract Libraries
- Review of Private and Permissioned blockchain
- How to Set up a Local Private Ethereum Blockchain
- How to Run Geth on a Local Private Ethereum Blockchain
- How to Build a Local Private Ethereum Blockchain with Mining
- How to Run Geth on a Local Private Ethereum Blockchain with Mining
- How to Create an Account on a Local Private Ethereum Blockchain
- How to Use Ethereum Optional Flags with New Chains
- Review of Ethereum Options for Development and Testing
- Review of Ethereum Developer Chain Options
- Review of Ethereum API and Console Options
- Review of Ethereum Networking Options
- Review of Ethereum Transaction Pool Options
Articles and Tutorials on Hyperledger Family
If you like to learn more about blockchain development with Hyperledger, reading the following articles and tutorials is highly recommended:
- Introduction to Hyperledger Architecture, Projects, Tools and Libraries
- Complete Review of Hyperledger Fabric Architecture and Components
- Hyperledger Fabric for System Administers versus Developers
- How to use Prometheus and Grafana to monitor Hyperledger Fabric
- Blockchain Developer Guide- How to Install Hyperledger Fabric on AWS
- Blockchain Developer Guide- How to Install and work with Hyperledger Sawtooth
- Blockchain Developer Guide- How to Install Hyperledger Burrow on AWS
- Blockchain Developer Guide- How to Install Hyperledger Iroha on AWS
- Blockchain Developer Guide- How to Install Hyperledger Indy and Indy CLI on AWS
- Blockchain Developer Guide- How to Install Hyperledger Seth and Docker on AWS
- Blockchain Developer Guide- How to Configure Hyperledger Sawtooth Validator and REST API on AWS
- Blockchain Developer Guide- How to Build Transaction Processor as a Service and Python Egg for Hyperledger Sawtooth
- Blockchain Developer Guide- How to Deploy Ethereum Smart Contracts with Hyperledger Burrow
- Blockchain Developer Guide- How to Create Cryptocurrency Using Hyperledger Iroha CLI
- Blockchain Developer Guide- How to Explore Hyperledger Indy Command Line Interface
- Blockchain Developer Guide- Comprehensive Blockchain Hyperledger Developer Guide from Beginner to Advance Level
- Introduction to Hyperledger Sawtooth Blockchain Development
Articles and Tutorials on R3 Corda
If you like to learn more about blockchain development on Corda , reading the following articles and tutorials is highly recommended:
Articles and Tutorials on Other Blockchain Platforms
If you like to learn more about blockchain development in other platforms, reading the following articles and tutorials is highly recommended: