Have you often wondered what exactly is Hyperledger wherever you've heard of it? Or are you generally curious about it but no idea what is means or what it does? Well, you are in luck because today we will learn more about Hyperledger so that next time you hear about it, you will have a good idea about what it is and what is does. I strongly recommend reading the official whitepaper which explains this technology in depth.
What is Hyperledger
Let me start with this - No, Hyperledger is not a blockchain, it is not a company and it is not a cryptocurrency. So what is it? Well, it is an open source technology, under which there are many frameworks and tools which can be used to create private or permissioned blockchain networks which in turn can be used to create custom apps. Being open source means all information about this technology is available to everyone. They even offer tutorials to quickly onboard developers.
Hyperledger began in 2015 when many different companies interested in exploring blockchain technology realized they could achieve more by working together than by working on their own. These firms decided to bring their resources together and create open-source blockchain technology that anyone could use. These far-sighted companies are helping blockchain to become a more popular and industry-standard technology. The main focus of this community is to solve many challenges in B2B (business-to-business) transactions using blockchain technology. The goal for Hyperledger is not to become a single software stack but to create a collection of tools, built with modularity and interoperability in mind, which can used by just about anyone to create a distributed ledger to suit their needs. Some of the big names involved are Intel, IBM, JP Morgan & Chase, American Express, Bosch, FedEx, and many more. Hyperledger is hosted under the Linux Foundation.
An obvious question can arise - why not leverage the existing blockchain networks like Ethereum to do this? Well, technologies like Ethereum are what we call a public permission-less blockchains. That means anyone can get on the network and see the entire transactions that has ever happened on it as everything is publicly maintained. Every company has private and confidential information which they safeguard with utmost security to maintain their advantageous position over their competitions. These information cannot be shared at any cost and this very fact prevents a company from using public blockchains. Also there is another fact to consider - Ethereum, for example, uses something known as a Proof-of-work (at the time of writing this article) as their consensys algorithm where the participants’ computers solve difficult math problems to make sure the information in the blockchain is always correct. This algorithm is not efficient enough to allow the network to scale with the demand. Moreover, since no single person or enterprise owns the network, there is no concept of accountability that exists in public blockchains as the users themselves are responsible for whatever they do in the network.
What the enterprises need is a private or permissioned blockchain where only interested parties are allowed to enter and read the data. With blockchains, many existing business processes in many industries can be streamlined to save time, save money, and reduce risk. And many entirely new processes—perhaps even whole new industries—can be invented.
Hyperledger - a 'greenhouse' for Enterprise Blockchain Development
Hyperledger serves as a “greenhouse” that brings together users, developers, and vendors from many different sectors and market spaces under the umbrella of open source technology. All these participants have one thing in common: All are interested in learning about, developing, and using enterprise blockchains.
As the greenhouse organization for open source blockchain development, Hyperledger provides the following benefits:
- Ensure steady development: Collaborative environment streamlines communication which helps new participants to catch up, by gaining faster access to necessary information which in turn speeds up the development activities for the benefit of the entire community.
- Better productivity through specialization (division of labor): Hyperledger’s greenhouse structure encourages specialization, which yields better productivity which makes participants who happen to specialize in similar areas not competing against each other.
- Collaboration to avoid duplicate efforts: Collaboration between participants is highly encouraged which can help in avoiding duplication, streamline the development of new projects, and encourage the creation of common components that benefit the entire community.
- Better quality control of code: Apart from being an open source project, Hyperledger promotes quality control by having a technical governing committee which reviews all projects throughout their life cycles.
- Easier handling of intellectual property: Hyperledger operates under an Apache 2.0 license for code and Creative Commons Attribution 4.0 International license for content, both of which are known to be enterprise-friendly.
All Hyperledger projects follow the same design philosophy which states that all the projects under it's wing must be modular, highly secure, interoperable, cryptocurrency-agnostic, and complete with rich & easy-to-use APIs that support interoperability with other systems.
Frameworks & Tools in Hyperledger
Hyperledger incubates and promotes a range of business blockchain technologies, including distributed ledger frameworks, smart contract engines, client libraries, graphical interfaces, and utility libraries. The following are some of the Hyperledger frameworks which are being actively pursued:
- Hyperledger Fabric: Fabric is an extensible blockchain platform for running distributed applications which can be adapted for virtually any industry. It uses container technology to host smart contracts called “chaincode” that contain the business rules of the system.
- Hyperledger Burrow: A modular blockchain client with a permissioned smart contract interpreter developed in part to the specifications of the Ethereum Virtual Machine (EVM). It is a permissionable smart contract machine.
- Hyperledger Indy: A distributed ledger that provides tools, libraries, and reusable components built for one purpose - decentralized identity - which can act as a shared source of truth.
- Hyperledger Sawtooth: A highly modular platform for building, deploying, and running distributed ledgers which can provide a digital record (such as asset ownership) that is maintained without a central authority or implementation.
- Hyperledger Iroha: Iroha is similar to Fabric & Sawtooth but it takes a different approach from them by providing features that are helpful for creating applications for end users, especially mobile applications.
There are also some tools which belongs under the Hyperledger technology, which are basically 'Ready-To-Use' toolsets that aides in blockchain development. The following are the current Hyperledger blockchain tools:
- Hyperledger Caliper: A blockchain benchmark tool that measures the performance of any blockchain by using a set of predefined use cases.
- Hyperledger Cello: A set of tools to bring the on-demand deployment model to the blockchain ecosystem thereby helping enterprises to quickly and easily adopt blockchain technologies, by providing automated ways to create, manage, and terminate blockchains.
- Hyperledger Composer: An open development tool set to make it simple and fast to create smart contracts and blockchain applications to solve business problems or integrating blockchain application to existing business systems.
- Hyperledger Explorer: A dashboard for viewing information on the network, including blocks, node logs, statistics, smart contracts, and transactions.
- Hyperledger Quilt: A set of tools that offer interoperability by implementing ILP or Inter Ledger Protocol developed in Java, which is primarily a payments protocol designed to transfer value across distributed and non-distributed ledgers.
Some use cases for Hyperledger
Let's try to understand Hyperledger technology with the help of some use cases. Many of the use case explanations may sound complicated; if that is the case, then please feel free to skip ahead. Just know that there exists some challenges in these industries which can be effectively and conveniently solved by leveraging Hyperledger technologies. Nevertheless, the following are the use cases for a permissioned blockchain from different domains:
- Banking (Eg: applying for a loan)
- Financial services (Eg: post-trade processing)
- Healthcare (Eg: credentialing physicians)
- IT (Eg: managing portable identities)
- Supply chain management (Eg: tracking fish from ocean to table)
In each case, Hyperledger has useful tools available; in some cases, a proof-of-concept has already been developed. Let's look at each of them in. details.
Banks want to lend, but only to borrowers who are worth the risks, i.e. people who have a good credit score. This motivates the banks to gather detailed, personally identifiable information (PII) from everyone who applies for a loan, such as date of birth, annual income, government ID or passport number, and so on. Ultimately, the banks use this PII to access an applicant’s credit rating. Regulations may demand that certain PII is shared with authorities, for example, to prevent money laundering. But retaining so much PII makes every bank a juicy target for hackers. Seeking a loan isn’t much fun for borrowers, either. The application process is intrusive, and it’s hard to “shop around” for the best rates. Every new application multiplies the effort and increases the risk that the applicant’s PII will be abused.
Hyperledger has a product called Hyperledger Indy which offers a transformative identity solution for this use case. With Indy, applicants can share only the information the banks need to make a decision, in a way that guarantees truth, builds confidence in the lender, and satisfies pressures from regulators. Anyone seeking a loan can apply to 100 different lenders in milliseconds, without placing any sensitive personal data into a hack-able database. Such a strong, distributed ledger-based identity establishes a global source of truth, which delivers value to many parties. Applicants can give consent, and everyone can agree on when & how it was given. Lenders can conform with regulations and show an immutable audit trail. As a result, the market can operate more efficiently meaning the banks can provide loans with confidence, while applicants can effectively safeguard their private data. This use case becomes even more compelling when we consider the add the strengths of other Hyperledger projects like Hyperledger Burrow, which can be used to turn loan applications into smart contracts and attach them to strong identities as a seamless next step. And Hyperledger Fabric, which can power a membership system by linking to the preexisting, self-sovereign identity on the loan application.
Among many possible use cases for the permission blockchain network in the financial service industry, especially in capital markets, post-trade processing can benefit from blockchain. Post-trade processing includes all the activities done after a trade is completed. This covers transactions that are done over-the-counter (OTC) or at an exchange. On a high level, post-trade processing includes these steps:
- 1. Trade validation: Validation and confirmation of a transaction after the execution of a trade.
- 2. Clearing: Matching the trade instructions & confirmations across the different parties which are involved in the trade
- 3. Settlement: Legally settling the contractual obligations to reach the finality of the transaction.
- 4. Custody activities: Adjusting the trade positions held with the custodians involved in the trade on behalf of the involved parties.
- 5. Reporting: Satisfying all reporting requirements for regulatory and internal risk compliance.
Needless to say but they are as complicated as it sounds. But today, all these steps are basically done through a scattered workflow across various departments between different entities involved in a trade such as brokers, central security depositories, clearing houses, exchanges, settlement agents, etc. Every trade involves many different processes, organizations and reconciliation efforts. For example, today both parties send separate settlement instructions to a trusted third party, like a settlement agent, which matches both data sets and instructions and settles the trade. Any mismatches trigger prolonged reconciliation efforts or may even result in a failed trade. All this duplication of effort introduces inefficiency and delays into post-trade processing.
When we compare such a complex model with the permission blockchain, doing post-trade processing on blockchain can be far more efficient. Any permissioned distributed ledger can provide a tamper-proof, irrefutable transaction log. Using the peer-to-peer strength of a blockchain, one party can insert transaction details for the other party to verify (just like what we saw in the banking example). Doing this on the same system at the same time can significantly streamline the process, as the network itself can act as a trusted third party, enabled by the immutable and irrefutable nature of blockchain transactions. All the data from all the steps and all involved parties is written on the blockchain, which is accessible on a need-to-know basis reduces the complexity even lower. And the blockchain system can also serve as an efficient basis for regulatory and trade reporting. To achieve this, Hyperledger Fabric, as discussed before, can be deployed as fully disjoint networks with separate endorser sets and ordering nodes to provide privacy and confidentiality. The transaction families in Hyperledger Sawtooth provide a reliable and powerful way to support post-trade activities. Hyperledger Indy’s unlinkable verifiable claims can be leveraged to report outstanding risk on a shared ledger without compromising privacy.
Blockchain technologies can be used to reduce one of the great annoyances of modern medical practice: “credentialing’’. Hospitals use the credentialing process to make sure that its physicians are competent and trustworthy. In a way, credentialing is the hospital’s way of performing “due diligence’’ on a physician, i.e. it makes sure that a doctor who claims be a doctor is a doctor. Basically it eliminates the situation which is brilliantly done in the movie 'Catch me if you can' where the lead actor joins a hospital pretending to be a doctor. But at the moment, this process imposes a huge burden, both on the physician applying for affiliation with a hospital and the hospital that must verify the incoming applications from different doctors. This can be simply solved by using Hyperledger technologies.
The medical colleges needs to come together and create a private blockchain system where they can upload tamper-proof credentials of various doctors who graduate from their institutions. Doctors, who are graduated can also upload further supporting credentials to the same blockchain network. A hospital, who wants to do due diligence on a doctor can validate that person's data on the blockchain saving a lot of steps and time delays. Credentialing in itself a good use case for blockchain technologies, which can simplify and streamline every step of the process, as discussed in this and previous use cases. Hyperledger Indy provides off-the-shelf solutions that can be used to implement a system of verifiable credentials which also safeguards the physician’s privacy, prevents correlation, keeps personal data off the ledger, and saves time and effort for everyone involved.
One of the most compelling applications of blockchain is for self-sovereign identity i.e. the idea that an individual owns their own “identity’’ and controls the data around it. This has profound implications for enterprise IT. Hyperledger Indy, as we have seen in many previous use cases, is a distributed ledger with a primary focus on self-sovereign identity. Indy shares some features with traditional enterprise identity systems such as 2-Factor Authentication (2FA), OAuth, etc with one profound difference that Indy identities are shared, not siloed and federated.
An identity stored in Indy is portable, so anyone can 'bring' it with themselves wherever the distributed ledger is accepted. This means that say there are 10 systems that support Indy identities; they don’t create 10 separate identities for a person X publicly. Instead, all 10 systems access this person X’s preexisting identity on the blockchain. Person X can simply show up and use his identity. An organization can cancel person X’s access, but never that person's identity, because person X owns it himself or herself. And person X (not the places that accept person X’s identity) controls access to his data. Indy is more flexible, more cost-effective, and more practical for managing identities by leveraging an enterprise blockchain.
Let's take the ocean fishing industry as an example. Ocean fishing represents more than $70B in worldwide trade. But the industry faces many problems. For example, it is estimated that at least 20% of all fish are caught illegally—yet only a tiny fraction of the catch are ever inspected. A recent study based on DNA testing found that nearly one -third of all the fish were mislabeled by sellers. And a detailed sampling from around 674 outlets across the United States found that 87% of snapper and 59% of tuna were mislabeled—and worse, 95% of all sushi restaurants were
serving mislabeled fish. These issues pose health risks for fish consumers, threatens vulnerable fish stocks, rob nations of taxes, and damage the integrity of the whole industry. The current supply chain that delivers fish from ocean to table is extremely complex and opaque. It includes many parties from different industries, and regulatory controls that cross national borders. That makes this supply chain a perfect opportunity for blockchain technologies.
A development team at Intel is using Hyperledger Sawtooth to build a traceability prototype that combines the distributed ledger, IoT sensors, and advanced communications to track various fish catch throughout the capture, processing, and transit. Sensors needs to be attached to the fish when it is caught so that it can record data such as location, temperature, and humidity. This data is then broadcasted to the ledger, along with further events in the processing of the fish like ownership changes, storage temperature range, transport company, and so on. This ledger can also provide data for both regulatory enforcement authorities and scientific analysis of fish harvesting & consumption. This prototype highlights the benefits of Hyperledger Sawtooth as a platform for tracing assets. It is the lightweight and highly decentralized consensus protocol in Sawtooth (proof of elapsed time or PoET) is particularly well-suited to a diverse, distributed ecosystem.
With this article, we discussed about the Hyperledger technology and it's various use cases. We discussed how it is governed and effectively maintained. We briefly summed up all the frameworks and tools that are developed under the Hyperledger technology. We then went in depth of some of the many use cases where Hyperledger can effectively solve various challenges. I know it has been a difficult journey as most of the topics that we've discussed here are admittedly complex. But I have tried my best to simply them for just about anyone to understand. I strongly encourage you to check out some of the resources which I will mention at the end of this article in order to get a much better understanding of this technology. I hope this article helped you in getting an understanding of what Hyperledger is.
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