Comparing blockchains: How to decide which blockchain to use
The growing investment in blockchain technology has given rise to a plethora of chains and distributed ledger technologies (DLT). While some are more popular than the other, each chain has its unique set of attributes that make it best suited for specific kinds of applications. In this post, I explore 5 illustrative business scenarios, outline its problems and detail why a certain blockchain is best suited to support its decentralized application.
- Supply chain transparency using Hyperledger Fabric
In an effort to provide consumers with more information about their source of food, HealthyFoods Inc. has decided to adopt blockchain technology for end to end supply chain transparency. HealthyFoods Inc. is a supermarket chain that sources from various suppliers, farmers, and food processors. Their complicated supply chain involves many actors that need to participate in their blockchain solution. While transparency is of utmost importance, confidentiality of vendor terms and agreements is paramount to protect the interest of their supply chain. HealthyFood’s team chose Hyperledger Fabric as it was designed for enterprise-grade confidentiality and transparency.
Being a permissioned ledger, the participants on the Fabric network are identified and authenticated. Thus, joining the network is subject to approval by a governance authority. The transactions recorded on the network could be public or confidential depending on the requirements of the vendor.
“While the contents of non-confidential transactions are open to all participants, the contents of confidential transactions are encrypted with secret keys known only to their originators, validators, and authorized auditors. Only holders of the secret keys can interpret transaction contents.” — The Hyperledger Project
In a situation where a single vendor provides competitive product rates to a client, it is simple to protect the confidentiality of contract terms.
“One truism about Hyperledger Fabric networks is that members know each other (identity), but they do not know what each other are doing (privacy and confidentiality).” — The Hyperledger Project
This makes Hyperledger ideal for business-to-business (B2B) use cases involving identified actors.
2. Tracking charitable donations using Ethereum
Good Will Charity is a not for profit that uses all its contributions for eradicating poverty in developing regions. In the past few years, they have seen a steady decline in contributions from its North American markets. After conducting some 3rd party analysis, Good Will found that their donors no longer trust that their money was used to assist underprivileged people in developing nations. Good Will’s leadership team decided to tackle this transparency challenge for their global donor base using blockchain technology.
Ethereum was their choice of the chain as their use case involved open participation and public auditability of transactions. The Ethereum network is permissionless, unlike Hyperledger or Chain. Therefore anybody can join the Ethereum network and transactions are transparent, welcoming public auditability.
3. Global payments using Chain Core
Globex is a global payments technology company that connects consumers, businesses, financial institutions, and governments to fast, secure and reliable payment systems. They’ve decided to adopt blockchain technology to provide real-time transfers for high-value international payments. Globex also requires all payments to be secure, trusted, predictable and KYC — AML compliant.
Chain Core is ideal for Globex for three reasons. Firstly, Chain Core’s infrastructure enables organizations to issue and transfer financial assets on permissioned networks. This would allow only authorized and identified entities to become a part of the blockchain network. Secondly, its business model is in the middle of the centralization to decentralization spectrum, which means that creation, control and transfer of the assets on the chain are decentralized but the network is operated by a “federation”, allowing all asset transfers to be confidential, secure and KYC-AML compliant. Lastly, their infrastructure also integrates with financial services applications and data warehousing solutions.
4. Machine to machine payments for the sharing economy using IOTA
John Smith bought his kid a shiny new bike as a birthday present, but over time realized that his kid rarely rides it. While looking for ideas around utilizing this idle resource, John came across IOTA. Inspired by Uber, Lyft and the dawn of the sharing economy, John decided to lease the bike when his kid wasn’t using it.
“While the whole world has adopted the ‘Sharing Economy’ in areas like driving and accommodation, IOTA enables a whole new realm where anything with a chip in it can be leased in real time. Most of our belongings stay idle for a long time that we possess ownership of it, but through IOTA many Appliances, Tools, Drones, eBikes and resources such as computer storage, computational power, WiFi bandwidth can turn into leasing-services effortlessly.” — IOTA
IOTA’s ledger is ideal for use cases requiring micropayments and connected devices. Autonomous devices, like bikes in John’s case, can be registered on the blockchain, leased without human involvement, and receive payment using IOTA’s native currency. Now, devices can achieve self-sovereignty by owning their wallet to store digital currency. This model works well for the renters, as they pay-per-usage, transact automatically with devices in a secure and trusted matter with no extra transaction fees.
5. Decentralized cloud storage using Sia
Researcher’s Inc. provides research and insights to clients on various subjects across many industries. Their analyst conducts extensive research and gathers a large amount of data to support their insights. Researcher’s analysts often undertake confidential projects for the NSA, which has increased data they are needed to store. As Researcher’s Inc. realized their need for a new storage solution that provided utmost security to their data and complied with existing regulations, they turned to Sia for a solution.
Sia provided them a decentralized private cloud solution based on blockchain technology that was redundant, private and far more affordable. Sia’s cloud storage is not provided by a single organization that has complete control over the hardware that stores their information. Sia splits apart, encrypts, and distributes files across a decentralized network. Since Researcher’s Inc. holds the keys, they own their data. No outside company can access or control their files, unlike traditional cloud storage providers.
Putting it all together
The examples above show that certain ledgers are best suited for specific types of applications. While identifying whether your use case requires blockchain is the first step, the second piece of the puzzle is finding a ledger that best fits your desired use case. The flowchart below sums up the ideas presented through the examples above to provide a guideline to decide which blockchain to use.
