One of the projects you will inevitably stumble upon when you visit blockchain conferences and follow blockchain news is Hyperledger of the Linux Foundation. But while it is relatively straight forward to understand what cryptocurrencies like Bitcoin and even Ethereum are, it is more difficult to get your head around the Hyperledger initiative. But if you do, you’ll find some exciting projects for non-currency, industrial blockchain applications.
What is Hyperledger?
Let’s start with what Hyperledger is not: Not a company. Not a cryptocurrency. Not a blockchain. Hyperledger is rather something like a hub for open industrial blockchain development. On its website Hyperledger explains:
“Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, Internet of Things, supply chains, manufacturing, and Technology.”
Hyperledger does not support Bitcoin or any other cryptocurrency. But the platform is thrilled by blockchain technology. Not since the Web itself, the website tells, “has a technology promised broader and more fundamental revolution than blockchain technology.” Blockchains has the potential to “build a new generation of transactional applications that establishes trust, accountability, and transparency at their core while streamlining business processes and legal constraints.”
So we have a lot of promises – and we have Hyperledger. With it, the Linux Foundation aims to create an environment in which communities of software developer and companies meet and coordinate to build blockchain frameworks. The Linux Foundation founded the platform in December 2015. In February 2016 it announced the first founding members, in March 2016 ten more members joined.
Today Hyperledger has an impressive list of more than 100 members. The list covers a wide scope of well know industry leaders. It includes mobility tech giants like Airbus and Daimler, IT-companies like IBM, Fujitsu, SAP, Huawei, Nokia, Intel and Samsung, financial institutions like Deutsche Börse, American Express, J.P. Morgan, BBVA, BNP Paribas and Well Fargo, as well as Blockchain startups like Blockstream, Netki, Lykke, Factom, bloq and Consensys. A lot of the world’s largest companies in Tech and Finance meet at Hyperledger with some of the hottest blockchain startups.
Something like the executive government of Hyperledger is the committee of leaders. It consists of more than 10 executives, most with decades of experience in Open Source and tight connections to several industries. You’ll find leaders of the Apache Foundation and the W3C Consortium as well as engineers from IBM and more. Some of Hyperledgers’s members, like Richard Brown and Tamas Blumer, already worked with Blockchain for years. For its members, Hyperledger does not only provide technical knowledge and software frameworks but also various contacts to industries and developers.
Relatively early in the history of Hyperledger, the project had to make an important decision. Executive Director Brian Behlendorf was asked if there will be an “Hyperledger Coin”, a monetary unit running on the Hyperledger blockchains. Behlendorf answered that the Hyperledger Project itself will never build its own cryptocurrency.
“You’ll never see a Hyperledger coin,” he said, “By not pushing a currency, we avoid so many political challenges of having to maintain a globally consistent currency.”
This decision strongly shaped the strategic goals of Hyperledger to build industrial applications of blockchain technology and sharply separating it from the get-rich schemes usually evolving from currency based blockchains. This might be more boring, but also more straightforward to the technology.
Further, a “charter” outlines the goals of Hyperledger, like a mission guide. According to it, the platform aims to “create an enterprise-grade, open source distributed ledger framework and code base” and create, promote and maintain an open infrastructure.
This is somehow telling, but somehow vague. It outlines some kind of program, but doesn’t answer the big, important questions: What do all these world leading companies and leaders do at Hyperledger? What projects are they pushing forward? Who participates?
The “umbrella strategy” of Hyperledger incubates and promotes a range of business blockchain technologies, framework, libraries, interfaces, and application. Currently, Hyperledger is the host of the following projects:
Hyperledger Sawtooth: This is a modular blockchain suite developed by Intel, which uses a new consensus algorithm called Proof of Elapsed Time (PoeT).
Hyperledger Iroha: Iroha is a project of a couple of Japanese companies to create an easy to incorporate the framework for a blockchain.
Hyperledger Fabric: This project is lead by IBM. Fabric is a plug and plays implementation of blockchain technology designed as a foundation to develop high-scaling blockchain applications with a flexible degree of permissions.
Hyperledger Burrow: This project develops a permissible smart contract machine along the specification of Ethereum.
Beside these framework projects, Hyperledger has several tool projects aiming to make the access to and development of blockchains easier and more effective. This is Cello, a blockchain as-a-service deployment model, Composer, a tool for building blockchain business networks, an Explorer to view, query and deploy transactions and associated data on blockchains, and Indy, a collection of tools, libraries and further components for digital identities rooted on blockchains.
Hyperledger obviously engages in a wide scope of non-monetary blockchain projects. But this rough view on these projects must remain dissatisfying, as the short descriptions don’t go far beyond keywords. So we take a closer look at the two most prominent projects: Sawtooth and Fabric. Both projects are created by large companies – Intel and IBM – and given to Hyperledger as open source code. With Hyperledger the companies continue pushing their blockchain projects forward, while everybody else is invited to contribute.
Sawtooth Lake is Intel’s modular blockchain suite. It is written in Python and designed for use cases in many fields from IoT to Financials. The dominant characteristics of Sawtooth Lake are that it supports both permissioned and permissionless application and deployments and that its uses a newly developed consensus algorithm called Proof of Elapsed Time (PoET).
PoET uses new secure CPU instruction, which is more and more available in new processors like Intel builds. With these instructions, PoET ensures a safe and random selection of a so-called “leader”. This can be compared with Bitcoin mining, in which the miners compete for a one-time access to write the blockchain. Other than Bitcoin’s proof algorithm, PoET doesn’t need specialized mining hardware.
To become a leader, every “validator” – which equals to a node or a miner – needs to use the secure CPU instruction to request a wait time. The validator with the shortest wait time will be elected as a leader. Like every good mining, algorithm PoET works like a lottery with the price to get write access to the blockchain.
Other than with cryptocurrencies there is no reward for the leader. It is just part of running the software. So there will be no energy-burning competition like in cryptocurrencies. Every node simply can use its CPU – as long as it is a new model and, maybe, from Intel – to participate in the leader selection for no costs. What is mining in Bitcoin, is simply a non-intrusive part of the software in Sawtooth Lake.
Another innovation of Sawtooth Lake is the building and propagation of transactions. A client builds transactions and submits it to the validators. This wrap the transactions they get inside of a batch and commit them to the state altogether. This is a similar, but not identical process as when cryptocurrency miners wrap transactions to a block. With this batching Sawtooth solves the problem of securely validating transactions which depend on each other.
To date, Sawtooth is tested in several applications. It is tested to record the journey of seafood from the ocean to the table, using IoT sensors, and track ownership, possession, and parameters through the whole supply chain, from the fisherman to the supermarket. The buyer can access a complete and trustless record of the whole live chain of the seafood. This use case in supply chain and product history is increasingly discussed for Blockchains.
Sawtooth is also tested to streamline the process of transferring bonds. The developers created a user interface to track and transfer bonds. With this users can manage a whole portfolio of bonds on the blockchain. Another use case of Sawtooth currently tested are digital assets. The developers built a platform for managing digital asset ownership on the Sawtooth blockchain, which could be able to manage a wide scope of digital assets. The connecting dot between this application of Sawtooth seems to be the marketplace for digital assets of any kind which is built in the blockchain and already has a graphical interface for users.
While these tests are ongoing and Sawtooths enjoys a wide industry interest, the project seems to get less traction than IBM’s contribution to Hyperledger.
Maybe the most interesting project in the Hyperledger family is IBM’s Fabric. Rather than a single blockchain Fabric is a base for the development of blockchain based solutions with a modular architecture. With Fabric different components of Blockchains, like consensus and membership services can become plug-and-play. Fabric is designed to provide a framework with which enterprises can put together their own, individual blockchain network that can quickly scale to more than 1,000 transactions per second.
What is Fabric and how does it work? The framework is implemented in Go. It is made for enabling consortium blockchains with different degrees of permissions. Fabric heavily relies on a smart contract system called Chaincode, which every peer of the networks runs in Docker containers. An overview of Fabric’s technology can be found in the manual.
While not completely and generally permissioned, Fabric allows enterprises to make parts of the blockchain, if not all, permissioned. Participants usually need to register to get the permission to join and issue transactions on a Fabric based blockchain. To use resources more efficiently, Fabric has fewer nodes than a public chain and computes data massively in parallel, which makes Fabric scale much better than public blockchains. Also its basic architecture supports confidential data, giving its members more privacy as they find on a public blockchain.
Maybe most important is the separation between so-called “Endorsers” and “Consensus Nodes”. If you are familiar with cryptocurrencies like Bitcoin you will recognize the separation between miners and nodes. The Endorsers have the state, and build, validate and propagate transactions and chaincode, while the Consensus Nodes orders the already validated transactions. While this separation has not been a concept of the first blockchain concept of Satoshi Nakamoto, but became an unwished reality in most cryptocurrencies, Fabric is one of the first to make this separation a design principle. This enables Fabric for example to implement a better division of labour, so that not every peer of the network has to do every job.
While having no native currency, Fabric allows the user to define assets from client side and use them with the Fabric Composer. Fabric’s Chaincode Smart Contracts framework is similar to Ethereum: Chaincode defines the business logic of assets, the rules for reading and altering the so called state of the assets. Like Ethereum Fabric maintains not a set of unspent outputs, as Bitcoin maintains, but the state of the blockchain which is not restricted to transactional data.
Other than the public blockchains of cryptocurrencies Fabric allows participants to build a separate channel for their assets and hence isolate and segregate transactions and a ledger. With this method, the chaincode needed to read and alter the state of an asset will only be installed on peers involved in this certain business case. Like in good chat programs Fabric’s blockchains allow the user to participate in both open and private interactions.
Beyond this IBM proposes an alternative design for public and permissionless blockchains. Fabric uses a public key infrastructure to generate cryptographic certificates tied to organizations and users. So it is possible to restrict data and channel access to certain actors.
Fabric’s strength seems to be the high grade of flexibility in permission and privacy while enabling high scalability through a more advanced division of labour of network participants.
For IBM Fabric serves as a flagship project for blockchain development. The IT giant uses Fabric for a variety of its own projects and for collaborations with several business partners.
In March 2017 IBM launched IBM Blockchain, a service that enables developers to “quickly build and host security-rich production blockchain networks on the IBM Cloud.” With this move, IBM catches up with Microsoft, which long integrated blockchains in its Azure Cloud.
However, while Microsoft is just a cloud host for several external blockchains, IBM heavily promotes its own blockchain framework, Fabric, for a lot of use cases. For example, at the end of March, Natixis and Trafigure partnered with IBM to use a blockchain based on Fabric for commodity trade finance for US crude oil transactions. All major steps in a crude oil transaction are digitized on the blockchain, massively improving transparency, efficiency, and security.
In April IBM announced several new blockchain projects based on Fabric: The company partnered with Sichuan Heijia to build up a blockchain based supply chain platform for pharmaceutical procurements. In the same month, IBM started to cooperate with Japan’s Mizuho Financial Group and Mizuho Bank to create a blockchain based platform for trade financing. This projects aim to streamline trading operations and improve supply chain efficiency.
In another project disclosed in April 2017 IBM cooperates with the National University of Singapore to develop a module on financial technology to improve the student’s education in this area. Finally, in May 2017, IBM was chosen as a partner of TenneT, Sonnen and Vandebron to develop a blockchain for managing the electric grid in the Netherlands and Germany.
The backbone of non-monetary, industrial blockchain technology?
While there is a lot of information available on Sawtooth and Fabric, there is less known about the other projects. Maybe these projects first have to grow and mature to be a subject of media releases, tests and real world application. But the best-known projects, Sawtooth and Fabric, are interesting and seem to be backed by strong IT companies. It will be interesting to see if Hyperledgers succeeds in connecting these blockchains, for example by developing tools which can be used with all Hyperledger blockchain frameworks.
While most other blockchain projects focus on cryptocurrencies and tokens, the projects around Hyperledger demonstrate a strong potential to build the backbone of non-monetary, high scaling industrial applications of blockchain technology. With interesting concepts and leaders in the technology behind, Hyperledge has not the worst chances to win this prize.