Clear DefinitionsFederated Blockchain
Pronunciation
[fed-uh-rey-tid blok-cheyn]
Analogy
Imagine a group of allied nations forming a joint council (the federation) to manage a shared resource or database. Each nation appoints representatives to the council, and decisions are made collectively by this group. It's not controlled by one nation, nor is it open for any individual to join the council; participation is restricted to the member nations.
Definition
A type of permissioned blockchain where multiple pre-selected organizations or entities act as validators and control the consensus process. It's governed by a consortium of members rather than a single entity or being open to the public.
Key Points Intro
Federated blockchains distribute control among a group of trusted entities.
Key Points
Also known as a consortium blockchain.
Consensus is managed by a pre-defined set of nodes operated by different organizations within the federation.
Offers a balance between the centralization of private blockchains and the openness of public blockchains.
Suitable for collaborative ventures where multiple organizations need to share data or processes with a degree of trust and control.
Example
A group of banks might form a federated blockchain for interbank settlements, where each participating bank runs validator nodes. Supply chain consortiums often use federated blockchains where manufacturers, suppliers, and logistics providers all participate in validating transactions.
Technical Deep Dive
In a federated blockchain, validator nodes are known and permissioned. Consensus mechanisms like Raft, Paxos, or variants of Byzantine Fault Tolerance (BFT) suitable for permissioned settings are often used. Governance is typically managed by the consortium members, who define rules for participation, data access, and protocol upgrades. While more decentralized than a private blockchain controlled by a single entity, it's less decentralized than a public, permissionless blockchain.
Caveat
The security and decentralization of a federated blockchain depend on the number, diversity, and trustworthiness of the participating organizations. Collusion among a majority of federated members could compromise the network. Governance can also be complex to manage among multiple stakeholders.
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