Is Hyperledger Fabric the Intranet of Blockchain?
How can companies that cannot share data on a public permissionless blockchain leverage blockchain advantages? The answer is: Hyperledger Fabric. In the following, I will dive into the Hyperledger blockchain project and explain how Hyperledger’s permissioning and access rights differ from Bitcoin and Ethereum.
In addition to Ethereum, another second generation blockchain implementation is Hyperledger Fabric. Having its roots in the Linux Foundation, the Hyperledger umbrella project is a large-scale open source project with the aim to
“create an enterprise grade, open source distributed ledger framework and code base, upon which users can build and run robust, industry-specific applications, platforms and hardware systems to support business transactions.”
— The Linux Foundation 2016
One of its sub-projects is Hyperledger Fabric which is
“intended (to be) a foundation for developing applications or solutions with a modular architecture, (and) allows components, such as consensus and membership services, to be plug-and-play.”
— The Hyperledger Project 2017
This basically means that Hyperledger Fabric provides a modular framework for companies that want to leverage blockchain advantages. The idea is that every industry has its specific demands for a blockchain and thus, companies should be able to choose components from the Hyperledger Fabric project to tailor the blockchain technology to their needs. For example, with upcoming releases of Hyperledger Fabric, companies can choose among different consensus mechanisms.
With its focus on corporate use-cases and its aim to provide core blockchain technology to companies that want to build blockchains tailored to the specific requirements of their use-cases, the Hyperledger blockchain differs in many ways from the highly open Bitcoin and Ethereum blockchain.
The fundamental difference is based on the question: How can companies leverage blockchain technology without revealing valuable data to the public and to competitors?
Permissioning and public access to data
Hyperledger Fabric enables its users to create their private instance of a permissioned blockchain. In permissioned networks, validating and non-validating nodes are run by known, whitelisted organizations and transactors on the network are granted an identity from an issuing authority service on the network. Therefore, unlike in the Ethereum and Bitcoin platform, in a private, permissioned blockchain, not everyone has access to transaction data validation and verification, but only those nodes that have been granted special rights by an issuing authority.
For example, take an industry consortia of supply-chain partners. The shipping company needs to share paper-based documents that proof information about the shipment with port and customs authorities. The cost of processing of paper-work can amount to 30% of the total shipping costs.
Thus, instead of using signed-paper documents that increase costs and shipping times, these partners could form an industry consortia and build a supply-chain solution based on Hyperledger Fabric. In such a private, permissioned blockchain, only the partners that need to participate can access data and verify transactions. As Hyperledger Fabric works with so called “channels” for conducting transactions, all authorized partners would be on the same channel. Unlike in the Bitcoin and Ethereum network, outside parties cannot simply connect to the channel.
Imagine for example that customers to the shipping company are also part of the network. The shipping company now wants sell to customer A at other terms than to the remaining customers and wants to keep this transaction confidential.
In a public, permissionless blockchain, like Bitcoin and Ethereum, any transaction between parties is always noticed by every node. Participants might not know about the specifics of the transaction, but they know that transactions between the shipping company and supplier A have occurred.
Hyperledger Fabric solves this challenge by implementing so called “sub-channels”. These sub-channels are used to transact only between specific partners in the network. Other partners cannot observe that transactions in a sub-channel have occurred. So in the above mentioned example, the shipping company could have a sub-channel with customer A and also one with customer B. Consequently, the shipping company could transact with A without letting B know.
This is the way how Hyperledger Fabric tailors blockchain technology to company-specific needs. When comparing public permissionless blockchains such as Bitcoin and Ethereum to the Internet, private permissioned blockchains, such as Hyperledger Fabric, can be compared to the Intranet where only permissioned nodes have access.
But how is consensus among nodes achieved in such a private permissioned blockchain? Is it similar to Bitcoin’s Proof-of-Work mechanism? To find out more, see here.
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