The Benefits of Using a Permissioned Blockchain
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Since its introduction as a platform for creating a decentralized currency free from the impacts of monetary policy conducted by governments, blockchain use has gradually increased. Businesses increasingly use it to manage supply chains, check payments, and construct algorithm-based contracts, among other things. Many blockchains in the industry are being constructed as permissioned blockchains, allowing only invited parties to read and/or publish transactions on the blockchain. Permissioned blockchains are appealing to businesses concerned with the privacy and security of company information should identities be discovered on a public blockchain, as well as the speed of processing transactions and compliance with regulations. While they are sometimes viewed as lacking the important benefits of a truly decentralized environment without intermediaries, permissioned blockchains are appealing to businesses concerned with the privacy and security of company information should identities be discovered on a public blockchain, permissioned blockchains are appealing to businesses concerned with the speed of processing transactions and compliance with regulations.
In a permissioned block-chain, unlike a regular database, no central organization administers or secures the data. Instead, all parties on the blockchain control, maintain, and preserve the information that is posted to it, adding an extra degree of protection in the event that one of the parties tries to alter or change previously agreed-upon data. By allowing each party on the blockchain simultaneous access to the shared information, the distribution of the shared information gives a layer of confidence to the parties on the blockchain, reducing the possibility that any single party can alter data that affects all of the blockchain's participants. The advantage is that blockchains are supposed to be immutable, requiring all blockchain parties to agree before a transaction is posted—at least in theory.
Aside from the duplication of time and expenses associated with performing a blockchain audit, there is also the matter of legal liability to consider. Rather of using tokens or money like in the public Bitcoin blockchain, players in a permissioned block-chain are rewarded by the prospect of legal punishment (Garrick Hileman and Michel Rauchs, "Global blockchain benchmarking research," Cambridge Centre for Alternative Finance, 2017).
Variable Interest Entities:
To undertake normal commercial activities such as debt issuance, asset development (i.e., mortgage-backed securities), and global expansion, corporations typically create alternative legal structures outside of their principal operational firm. Once these legal structures have been formed, they must be evaluated for consolidation using either the voting interest model or the variable interest model. It is obvious that entities fully owned by one corporation must be consolidated into the parent corporation; however, when the establishing corporation is not a majority shareholder, as would be the case if multiple parties chose to establish an entity with equal ownership and contributed capital, how these entities must be treated for financial reporting purposes is less clear. The voting interest model, as defined by ASC 810-10, mandates consolidation if the parent firm possesses the majority voting interest in the subsidiary.
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