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CFA Level I · CFA Level I Exam · Introduction to Digital Assets

In a distributed ledger network, which feature most accurately distinguishes a permissionless network from a permissioned network?

A permissionless network lets any participant join and take part in validating transactions without prior approval. A permissioned network limits participation to approved parties. That openness, rather than the use of encryption, is the defining difference between the two network types.

  1. ATransactions are always encrypted
  2. BParticipants must be approved before joining
  3. CAny participant can join and validate transactionsCorrect

Explanation

A permissionless network is open: anyone can join, submit transactions and take part in validation. A permissioned network restricts participation to approved parties, so the second option describes a permissioned network. Encryption is not what separates the two designs.

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