Permissionless public blockchains are accessible to anyone. But they’re often unsuitable for heavily regulated institutions, like banks or public-sector initiatives. They lack the necessary identification, authentication, and authorization requirements. And transaction fees in permissionless blockchains make them too expensive for many projects.
Permissioned private blockchains offer what permissionless public ones lack, but they also cost a lot to develop and support This makes them hard to scale.
Yet blockchain is still the ideal solution for many use cases.
The Inter-American Development Bank (IDB) struggled to find the right balance by using different networks for different projects. But this variety came with other issues, like compliance, technical support, and accountability. These challenges prevented IDB’s pilot projects from expanding into enterprise-level projects.
IDB Lab is the innovation laboratory for IDB. It set about finding solutions to the problems of regulatory compliance, support, and governance. As it investigated the problem, IDB Lab noticed similar struggles throughout Latin America and the Caribbean (LAC). Organizations were looking for an alternative to permissionless public and private blockchain networks to deploy their solutions.
Permissioned public networks—combining the benefits of the other blockchains without their drawbacks—seemed like the answer. Successful networks already existed in the EU, and IDB Lab thought it could develop one for LAC.
In March 2019, it funded a project to create LACChain, a permissioned public blockchain infrastructure. Could IDB Lab develop a scalable and sustainable network for the LAC region…and beyond?
To build a regional blockchain ecosystem, IDB Lab needed help. Establishing the right alliance was the first step of the project.
“IDB Lab intended LACChain as a public good,” says Alejandro Pardo Vegezzi, IDB Lab Principal Specialist and LACChain Leader. “We wanted to be as neutral and inclusive as possible.”