Hybrid Blockchain: The Best of Both Chains

A Google search with the words ‘hybrid blockchain’ yields roughly 756,000 search results.  This isn’t many, when compared to ‘public blockchain’s’ 40 million search results or ‘private blockchain’s’ 30 million.

As a starting point, it is important to acknowledge that one of the core elements that make up blockchain actually came from a hybrid solution for digital time stamping of documents - decentralised hash verification.

Public Blockchains Decentralised Verification + Timestamping - The Genesis

I recently attended the Blockchain Economy World Tour in Sydney where Dr W.Scott Stornetta, presented his ‘aha’ moment in developing digital timestamping, one of the core components of bitcoin.

For those of you not familiar with Digital Time Stamping, it was developed back in 1991 by Stuart Haber and W.Scott Stornetta, who is the Chief Scientist forFirst Digital Capital. Their work on digital time stamping was referenced three times in Satoshi Nakamoto's white paper on Bitcoin.

In Scott’s presentation he referred to his ‘aha’ moment as “letting the world become your witness”.  He went on to explain that if you are not sure who to trust in a centralised controlled environment then the best protection would be to invite the public at large to verify that this transaction took place. 

This decentralised public verification and timestamping of a generated hash is one of the core components of bitcoin and blockchain.

Another key observation regarding Dr. Stornetta’s work is that public verification was used to publicly verify a hash that was generated on a private network. It was 1991, and his work pre-dated the development of blockchain.

Satoshi Nakamoto incorporated decentralised public verification into a decentralised currency, bitcoin. Subsequently, most of the blockchains that have followed bitcoin have also focused on building atop of a public blockchain.

This raises the question: 

Does a hash need to be generated on the public blockchain, or can it be generated on a private blockchain while using a public counterpart exclusively for verification? 

Enter Hybrid Blockchain.

Hybrid blockchain offers the benefits of both public blockchain and private blockchain.

Firstly, hybrid blockchain consists of the public blockchain (that all participants are a part of) and a private network (also referred to as a permissioned network) that restricts participation to those invited by a centralised body.

Secondly, this private network generates the record (hash) of transactions which is stored and verified on the public blockchain.

The benefits of the private blockchain include faster transaction speeds, privacy of the data/ content and a centralised control over providing access to the blockchain.   

Hybrid provides an enterprise-ready blockchain solution that is much better suited to highly regulated enterprises and governments as it enables them to have the flexibility and control over what data is kept private versus shared on a public ledger. Coupled with the operational needs of faster transaction times, security and auditability features that are not suited to public blockchains.

Large enterprises want the benefits that blockchain can deliver without the associated risks of a public blockchain. Especially as blockchain is still nascent and evolving. 

This enterprise-need for a suitable blockchain solution has resulted in creation of several private-public blockchain focused projects including R3 Consortium, IBM’s Hyperledger and the Enterprise Ethereum Alliance.