Consortium Blockchain networks: present and... future?
In the late 2010s, consortial Blockchain networks emerged as a new solution to the problems faced by public blockchains, especially in privacy, scalability, and governance issues. Networks such as the European Blockchain Services Infrastructure (EBSI) (2018) or LACChain (2018) have been instrumental in launching new technology initiatives for both businesses and government entities. These public-permissioned networks have driven projects in areas such as digital identity, financial inclusion and transparency in public and private services. These consortial environments were born as an alternative to traditional public networks, with the aim of fostering a more formal and structured collaboration between corporations and public and private institutions. However, despite their advantages, they also raise questions about key issues such as internal governance, data protection and service continuity. En este artículo exploraremos estas cuestiones y presentaremos soluciones para asegurar que una red consorciada funcione de manera eficiente, cumpliendo con los estándares operativos, de seguridad y de conformidad legal. Governance: the key to trust Governance ensures that all decisions in the consortium network are made in a fair and collaborative manner. Unlike traditional digital services managed by a single large company, where a single entity has full control of the platform, in consortium networks, decentralization allows each consortium member to have its share of influence, depending on its role and contribution to the network. This model avoids the concentration of power in a few hands, prevents censorship, promotes collaboration and ensures that decisions reflect the interests of all participants. Decentralized consortium networks foster collaboration and ensure that decisions reflect the interests of all participants. The need to establish clear conflict resolution mechanisms that ensure that any disagreements among members are handled fairly, without compromising the functioning of the network, must also be taken into account. Otherwise, the absence of these procedures could generate tensions that would not only slow down decision-making, but also jeopardize the stability of the network and its ability to operate efficiently. On the other hand, the conditions under which new entities may join the network must also be established, ensuring that they meet the necessary technical and regulatory criteria. It is also important to define in a transparent manner how a member can leave the consortium without jeopardizing the integrity of the systems. All participants must have clear access to the rules, procedures, and decision-making processes to reinforce confidence in the system and allow the network to be operated efficiently and fairly. ✅ It is not only a question of allowing or denying the participation of new partners at the administrative level, but at the technical level, new entities must be actively integrated into the network, without interrupting the service or interfering with previously established levels of care and quality. This ensures that the incorporation of new players does not adversely affect the performance and stability of the network. Privacy and security: the foundations of a trustworthy network Data protection and privacy underpin trust in a consortium Blockchain environment. Nodes that validate and record transactions must follow rigorous security practices, such as protecting against unauthorized access, encrypting information and using firewalls to prevent external threats. It is important that these networks use security standards, such as ISO 27001 or the National Security Scheme (ENS) in Spain. Following these frameworks ensure that data is handled securely, especially when exchanged with other networks. It is essential from the initial design of the infrastructure to plan how to protect sensitive information, always ensuring confidentiality and compliance with data protection laws. In terms of identity management, it is crucial to verify and authenticate that all users interacting with the network, whether through digital wallets or external services, have the necessary authorization to access the information stored on the blockchain. In order to achieve this, robust digital identity systems must be implemented to ensure not only the privacy of users, but also their anonymity when necessary. Tools such as multifactor authentication or decentralized identity solutions are key to reinforcing security in this environment. ✅ Ongoing audits also play a crucial role. They make it possible to detect vulnerabilities, verify compliance with security policies and ensure that data exchanges between different networks comply with the regulations in force, always protecting the information. Resilience and service continuity: a key pillar Resilience and service continuity are two of the most important elements to take into account when managing consortium blockchain networks, especially when companies and institutions depend on them for critical operations. In general terms, resilience is nothing more than the network's ability to remain operational even if some of its nodes fail. This can be achieved by incorporating mechanisms from the initial design of the network to ensure that the entire system continues to function without interruption. Think of it like emergency generators in a hospital: if the power fails within a reasonable period of time, the hospital can continue its daily operations as normal. Similarly, a blockchain network needs to have backup systems so that if one or more nodes stop operating, others take over. How is this achieved? Through redundancy mechanisms and algorithms that allow the network nodes to rotate dynamically. In other words, there will always be enough active nodes to validate transactions and generate new blocks in the chain. This ensures that the network continues to operate efficiently, and that companies or institutions can continue to trust that the network will keep their transactions and data secure, no matter what. On an efficient level, real-time monitoring allows technical teams to constantly assess how the network is performing and detect potential problems before they affect service. These systems allow network resources to be adjusted according to demand, which also aids scalability, i.e. the ability to grow and adapt as needed. Service Level Agreements (SLAs) established between the operating teams are key to ensuring that each node in the network operates efficiently and securely. On the other hand, the Service Level Agreements (SLA) between all participants define quality standards, establishing criteria on response times, availability and resilience. This means that, on the one hand, each operating team assumes individual responsibility for the management of its node, but at the same time, this responsibility is also distributed jointly and severally among the rest of the network administrators. Therefore, if a node has difficulties, the rest of the consortium can collaborate to maintain the stability and continuity of the service. Regulatory compliance: increasingly present Once the technical aspects have been established, it is also important to take into account compliance with laws that protect privacy and data security. This is especially relevant for companies and institutions operating in sectors where the handling of personal information is sensitive. In Europe, for example, the General Data Protection Regulation (GDPR) sets very strict rules on how personal data must be handled. Consortium networks, too, have to comply with these regulations from the design stage, implementing advanced security measures to protect users' identities. It must also be ensured that individuals using the network can exercise their rights, such as the right to be forgotten or to access their data, even in a decentralized environment. Complying with regulations avoids possible sanctions and generates confidence among network participants and end-users. Complying with current regulations not only helps to avoid possible sanctions, but also generates trust among network participants and end users. Trusting that data is protected and laws are followed makes companies and institutions more willing to adopt these technologies. In Europe, for example, there are also other important regulations to take into account, such as eIDAS, which regulates electronic identification and trust services, or MiCA, which establishes rules for cryptoassets. ✅ Compliance with these regulations ensures that the network can operate legally throughout Europe and makes it easier for more organizations to use it securely and efficiently. What do we do with the gas? This dilemma is one of the most recurrent when considering how the network will be designed. In some public blockchains, such as Ethereum, each transaction requires the payment of a fee (known as gas) to incentivize nodes to validate and process transactions. This model ensures that network resources are used efficiently and prevents excessive unnecessary transactions (spam). It also provides a clear incentive mechanism for those who keep the network active. In consortium networks, however, where all participants are already known and trusted, it may not be necessary to implement such transaction fees. Instead of monetary incentives, the governance model and agreements between consortium members may be sufficient to ensure the proper functioning of the network. Even so, gas can be useful to control access to network resources, preventing a single entity from abusing or overloading the system. The payment of a fee ('gas') to incentivize nodes to validate and process transactions ensures that network resources are used efficiently and prevents unnecessary transactions. In many gas-free networks, on the other hand, transaction fees are eliminated altogether, simplifying network usage and reducing operating costs for businesses. This makes the network more accessible and improves the user experience. However, eliminating gas also brings some challenges: without a direct incentive for nodes that validate transactions, other agreements or mechanisms may need to be put in place to ensure that these nodes remain active and keep the network running. With no fees to limit the number of transactions, the network could be overloaded with unnecessary or abusive transactions, which would affect its performance. ✅ Deciding whether a consortium network should operate with or without gas is not a simple choice. It all depends on finding the right balance between the need for node incentives and control of access to platform resources. Each network is different, so this decision must be made according to the objectives and specific characteristics of the consortium. Is there a future? So far, both companies and institutions have played a key role in the development of public-private networks. These actors have succeeded in creating collaborative environments that combine new technologies with essential requirements such as security, privacy, and governance. This work has been vital in sectors where regulatory compliance is critical and has enabled consortium networks to offer scalable and resilient services. In addition, these advances have also been important in defining interoperability standards that allow different networks to communicate with each other efficiently. The major advances in these networks are likely to focus on aspects such as interoperability and decentralized digital identity. Looking ahead, the biggest advances in these networks are likely to focus on aspects such as interoperability and decentralized digital identity. In the short to medium term, these capabilities will be key for multinational companies and governments that need to exchange data securely across jurisdictions without losing control over information privacy. Users, in addition, will also stand to gain, they will be able to have more control over their own data, avoiding intermediaries in identity verification processes. This will not only improve security but will also increase efficiency in sectors as diverse as banking and public services. These advances show that, although blockchain networks have reached a high degree of maturity, further progress is needed to consolidate them, evolving in important aspects such as security, information privacy, decentralization, and regulatory compliance.
November 12, 2024