Antagonistic Harmony: Permissioned and Permissionless Blockchain

The rise of blockchain has fundamentally reshaped the financial ecosystem. Since Bitcoin’s genesis in 2009, permissionless blockchains have introduced an open, decentralized model for transacting value—fueling everything from DeFi to NFTs. Meanwhile, traditional financial institutions (FIs), drawn to the benefits of blockchain yet cautious of its risks, have leaned into permissioned systems that offer control, privacy, and compliance.

This duality—decentralization vs. governance—is no longer a competition but a convergence. Fireblocks’ latest white paper, “Permissioned and Permissionless Blockchains in Tomorrow’s Financial System,” dives into the unique advantages, trade-offs, and emerging interoperability between these architectures—and what it means for the future of finance.

The Evolution of Permissionless Blockchains

Permissionless blockchains like Bitcoin and Ethereum have evolved through three distinct phases:

• Digital Currency Era (2009–2015): Bitcoin introduced the world to decentralized money—offering a transparent, trustless way to transfer value.






• Programmability & DeFi (2015–2021): Ethereum’s smart contracts unlocked a new era of decentralized applications (dApps), powering everything from NFTs to DAOs.






• Scalability & Interoperability (2021–present): Layer 2 solutions like Arbitrum and zkSync, alongside alternative Layer 1s like Solana and Avalanche, have improved speed and cost-efficiency. Meanwhile, interoperability protocols like Chainlink CCIP, Wormhole, and LayerZero are enabling cross-chain connectivity.

Together, these advances have turned permissionless networks into robust ecosystems that offer composability, global access, and censorship resistance.

Why Financial Institutions Have Been Cautious

Despite their potential, permissionless blockchains pose real challenges for institutional use:

• Regulatory Compliance: Varying legal frameworks and inconsistent global guidance increase risk and cost.






• Scalability Constraints: High fees and throughput limits, especially during periods of network congestion, can disrupt transaction flows.






• Privacy Concerns: Public transaction data may expose sensitive financial activities—an issue for both client confidentiality and regulatory mandates.

For financial institutions, the question isn’t whether blockchain has value—it’s how to harness it without compromising compliance, privacy, or operational control.

Permissioned vs. Permissionless Blockchains

Permissioned blockchains—such as Hyperledger, Corda, and the Canton Network—offer a more structured approach. With controlled access, auditability, and built-in governance, they meet many of the requirements needed for institutional crypto custody, digital asset settlement, and tokenized securities issuance.

By contrast, permissionless networks offer decentralization, liquidity, and global accessibility—ideal for open financial infrastructure and secondary markets.

Use Cases for Each Model

• Permissionless Blockchains: DeFi, digital identity, cross-border payments, content distribution.






• Permissioned Blockchains: Interbank settlements, tokenized bonds, regulatory-compliant digital assets.

Why Interoperability Matters

To build the future of digital finance, these two blockchain models must talk to each other. Enter interoperability.

Cross-chain messaging protocols like Chainlink CCIP, Axelar, and LayerZero are making it possible to move assets and data between blockchains in a secure, scalable way. This isn’t just technical progress—it’s a foundational shift. It enables financial instruments like stablecoins, tokenized securities, and central bank digital currencies (CBDCs) to operate across platforms while preserving security, auditability, and compliance.

A Hybrid Model for Modern Institutions

To leverage blockchain effectively, FIs must adopt a hybrid approach.

The future of blockchain in finance isn’t binary. It’s hybrid. Financial institutions are beginning to strategically split functions across both blockchain types:

• Primary markets (e.g., issuance and settlement of tokenized assets) can run on permissioned networks to meet regulatory and operational requirements.






• Secondary markets (e.g., liquidity, trading, staking) can operate on permissionless networks, enhancing market access and transparency.






• Smart contracts and cross-chain interoperability serve as the connective tissue between the two, enabling composability at scale.

Real-World Adoption in Motion

• BlackRock launched a tokenized money market fund on Ethereum.






• Franklin Templeton deployed a government money market fund on Arbitrum.






• ABN AMRO issued a €5M digital bond using Stellar.






• ANZ Bank created a permissioned institutional stablecoin (A$DC).






• The Reserve Bank of Australia, working with Fireblocks and others, piloted a CBDC on a private blockchain with programmable payments.

These examples highlight a clear trend: global institutions are leaning into blockchain—carefully, strategically, and with an eye toward long-term interoperability.