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Japanese Company, Tech Bureau, Launches Private Blockchain Project

Blockchain technology underpins bitcoin and recently financial institutions and companies have been showing a great amount of interest in the technology.

Based in Osaka, Japan, Tech Bureau is the parent company behind the Japanese Bitcoin Exchange Zaif. The company recently announced project Mijin, attempting to reduce infrastructure costs, while improving security and performance.

“Mijin is the platform to let anyone set up a blockchain on a peer-to-peer network easily.”
— – Tech Bureau

Mijin will be developed with assistance from the developers at the NEM blockchain project. The project target archaic databases and could be used to create a range of products, including payment services, online games, airline mile programs, financial systems and governance systems.

According to the press release, Mijin will allow financial institutions to reduce infrastructure costs by up to 1000% by 2018, and the project intends to achieve this by using what is called a ‘permissioned’, or ‘private’, blockchain. “Within a single company or between partners, a permissioned blockchain is often desired, not only to realize zero downtime, but also also to improve security and performance, at low cost,” states the projects press release.

"A key difference compared to Bitcoin is that Mijin will allow private blockchains. This is profoundly interesting because of the potential to completely change financial, logistics, and governance systems."
— –  Mori Hamada & Matsumoto Legal Office, Tech Bureau Legal Adviser

The idea of private blockchains has become increasingly popular this year. Last month, Vitalek Buterin outlined the key points of difference between public and private blockchains on the Ethereum blog. “Essentially, instead of having a fully public and uncontrolled network and state machine secured by cryptoeconomics (eg. proof of work, proof of stake), it is also possible to create a system where access permissions are more tightly controlled, with rights to modify or even read the blockchain state restricted to a few users, while still maintaining many kinds of partial guarantees of authenticity and decentralization that blockchains provide.”

Vitalek goes on to say that private blockchain systems are primarily of interest to financial institutions, and has led to a “backlash” from those who see such developments as “either compromising the whole point of decentralization or being a desperate act of dinosaurish middlemen trying to stay relevant (or simply committing the crime of using a blockchain other than Bitcoin)”.

Vitalek Buterin“However, for those who are in this fight simply because they want to figure out how to best serve humanity, or even pursue the more modest goal of serving their customers, what are the practical differences between the two styles?”
— – Vitalek Buterin

Buterin explains that there are clearly some benefits to a private blockchain: The rules can be changed, transactions can be reverted, and balances can be modified. In addition, transactions are cheaper, as they only require a few nodes which will have high processing power. These nodes, which make up the network, should also be well connected and faults could be fixed quickly.

Given all the advantages of private blockchains, it may appear that they are unquestionably the best choice for institutions. “However,” Butelin states “even in an institutional context, public blockchains still have a lot of value, and in fact this value lies to a substantial degree in the philosophical virtues that advocates of public blockchains have been promoting all along, among the chief of which are freedom, neutrality and openness.”

Blythe Masters, who made Managing Director of JP Morgan Chase at 28 and is currently CEO of Digital Holdings, is also a fan of private blockchains. Earlier this year Digital Holdings acquired Hyperledger, whos technology enables financial institutions to create multiple private blockchains across a known group of participants. “Unlike other distributed ledgers, Hyperledger does not have an inbuilt crypto-currency and uses a proven consensus algorithm capable of thousands of transactions per second,” states the company.

Jon Matonis, the founding director of the Bitcoin Foundation, told IBTimes that he has concerns regarding possible blockades created by permissioned blockchains. "If countries can be blocked out of the payments system because they are in a politically incorrect part of the world, then they would also be able to be blocked out of something that’s a permissioned blockchain,” he said.  "We haven’t really changed anything then if it’s not open access, if all they have done is recreated the cartel.”

Jon Matonis"They cannot answer that a permissioned blockchain won’t be used against smaller financial institutions for purposes of a blockade. The primary Bitcoin blockchain would route around that."
— – Jon Matonis

Despite the ongoing debate, the underlying theme is that both applications of the blockchain can cater to different demands.  “The solution that is optimal for a particular industry depends very heavily on what your exact industry is. In some cases, public is clearly better; in others, some degree of private control is simply necessary. As is often the case in the real world, it depends,” states Buterin.

Mijin is scheduled for beta testing at the start of next year. CEO Takao Asayama believes that, "If a Mijin blockchain is used, security can increase and at the same time the need for redundant, durable, and explicitly backed-up systems, will be removed. Our mission is to allow financial institutions to reduce infrastructure costs to 10% of the current costs by the end of 2018."

“Mijin will provide an initial capacity of up to 25 tx/sec by the end of 2015 with geographically distributed nodes, with the goal to improve throughput up to 100 tx/sec by the end of 2016.”
— – Tech Bureau

Makoto Takemiya, Chief Blockchain Officer at Tech Bureau and core developer of Bitcoin 2.0 project, NEM, added that, "NEM has been in development from scratch for 18 months and the NEM team has the expertise and experience to make Mijin the best private blockchain system in the world."


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