How Does Permissionless Work?

A permissionless system is one that has no apparent ‘gatekeepers’, meaning there isn’t something or someone able to stop any particular person or thing from using it or limiting access to it. For example, Bitcoin is permissionless because anyone can use its features.

Why Is Permissionless Important?

In the cryptocurrency world, the aspect of permissionless is coveted; permissionless systems do not allow for any one entity to manipulate the way they work. A main reason why Bitcoin came into existence is because Satoshi Nakamoto believed that the banking system was flawed, as it requires a central authority that could dictate how things operated. Permissionless blockchains, however, allow for no discrimination. They are inclusive, and anyone has an equal opportunity to participate in them.

Permissionless blockchains like Ethereum, Bitcoin, and Avalanche use either a Proof of Work (PoW) or Proof of Stake (PoS) consensus method. These are important because they work in tandem with a permissionless network. Miners and stakers are incentivised to act honestly and ensure they help the blockchain maintain its long-term health.

While most blockchains thrive and aim to have a permissionless system, not all are. Typically, these are used for private reasons and are not open to the public. For example, a consortium blockchain may not be permissionless, as only the consortium operates on it.

Key Takeaway

Permissionless refers to a system — typically related to blockchains — in which no person or thing can dictate who is allowed to use it and how it is used.

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