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Getting Down to Business: Hyperledger Fabric at Work

January 16, 2018
8 min read

As mainstream news coverage of blockchain remains focused on flashy Bitcoin exploits, businesses are — well, getting down to business. Industry collaboratives such as the Enterprise Ethereum Alliance and Hyperledger are moving forward with real-world implementations.

One of the best examples of this is Hyperledger Fabric, a blockchain framework that allows businesses to build out their own blockchain projects. Oracle and IBM, among others, have built blockchain cloud services on top of Fabric. Many enterprise companies wanting to develop blockchain apps with robust privacy and permission support are, at the very least, considering Fabric.

Think of Hyperledger Fabric as a blockchain-as-a-service (BaaS) for the enterprise.

Offering blockchain as an enterprise service makes sense, given its relative newness and some organizations’ wariness. This approach could help companies who don’t want to take on the expense of building and maintaining the architecture. Businesses can advance their blockchain strategy with less risk – and they don’t have to struggle to hire blockchain developers, who are in exceedingly high demand.

“The next application of blockchain will be hyperledgers,” Rohit Adlakha, VP of Wipro HOLMES, tells eWeek. “Enterprises will start investing in blockchain. Blockchain’s ability to force transparency and security across every transaction will radically alter any industry that requires a transfer of assets or information based on trust, while reducing friction and costs.”

To understand Fabric, you first need to understand the basics of Hyperledger.

Hyperledger: It’s Not a Platform

For the simplest explanation, just turn to the Hyperledger site. It’s “an open source collaborative effort created to advance cross-industry blockchain technologies.”

The global collaboration, hosted by The Linux Foundation, includes leaders in aeronautics, finance, and banking (including credit card services), healthcare, Internet of Things, supply chain, manufacturing, and technology. It boasts 200+ members, and many of them compete with each other.

So what does Hyperledger do? It aims to enable organizations to build robust, industry-specific applications, platforms, and hardware systems to support their individual business transactions by creating an enterprise grade, open source distributed ledger framework and code base.”

Keep in mind that Hyperledger is neither a tool nor a platform; rather, it’s essentially a hub for open blockchain development. It allows organizations to build and run industry-specific blockchain applications, platforms, and hardware systems that support their own business transactions.

Hyperledger also incubates and promotes several business-related blockchain and distributed ledger technologies. There are four other frameworks besides Fabric: Sawtooth, Burrow, Iroha, and Indy. It also maintains a suite of tools: Cello, Composer, Explorer, and Quilt.

Fabric For the Enterprise

Each Hyperledger platform and toolset has a unique purpose, and Fabric is emerging as the choice for enterprise-level businesses. Companies wanting to develop blockchain apps with robust privacy and permission support are looking to Fabric.

In July 2017, the Linux Foundation released Hyperledger Fabric v.1.0 and positioned the release as the leading blockchain platform for business and enterprise applications. It’s the oldest of the various Hyperledger projects and – as of the end of 2017 – it has the most active community of developers.

Fabric is being targeted toward general applications such as supply chain and asset management, and it boasts important core features, namely identity, privacy, confidentiality, performance, and scalability.

Initially built as a project within IBM, Hyperledger Fabric is meant to be a foundation for developing blockchain applications with a modular architecture. “The name was donated by Digital Assets and the code base has been donated by IBM and Digital Assets. IBM has also contributed major engineering efforts to Hyperledger Fabric. That is why many people confuse it for an IBM project,” Marta Piekarska, director of ecosystems at Hyperledger, explains in an interview with Blockchangers.

Several features (which we’ll discuss below) distinguish Fabric from other blockchain technologies. For instance, rather than providing a “permissionless” system that lets unknown parties participate, members of a Fabric network must enroll through a Membership Service Provider (MSP). It also allows for separate, private “channels.”

But before we get into that, let’s back up. A good way to understand Fabric is to look at some of the new and emerging use cases.

IBM Use-Case: Cross-Border Money Exchanges

In October 2017, IBM announced the launch of a Fabric-based blockchain use case to help with universal cross-border payments. How will it work? IBM gives this example: In the future, a farmer in Samoa could enter into a trade contract with a buyer in Indonesia. The blockchain would be used to log contract terms, manage trade documentation, allow the farmer to put up collateral, and finalize transaction terms with immediate payment. The entire process, which currently is a paperwork and compliance nightmare, would happen relatively easily, IBM says.  

The project is a partnership with KlickEx Group, a United Nations-funded financial services company, and, a nonprofit that supports open-source blockchain networks for financial services on the project.

With this new technology, merchants and consumers will be able to send money across borders in near real-time, accelerating a process that normally takes days. Specifically, the new blockchain network enables the electronic exchange of 12 currencies across the Pacific Islands as well as Australia, New Zealand and the United Kingdom.

Oracle Use-Case: Business Loans

Oracle also announced its Fabric-based BaaS offering in October 2017. Its initial use case involves business loans.

AuraBlocks is using Oracle’s Blockchain Cloud Service to help one of its clients, Biz2Credit, verify the identity of borrowers.

Biz2Credit advances funds to merchants based on credit card receipts. With the AuraBlocks technology, the loan application information is verified within the blockchain ledger. So the next time the merchant wants a loan, he or she can use the same information without going through the verification process again, SDX Central reports.

“[Biz2Credit] thought there was an opportunity to help the borrowers lower their rates and get access to more money by using the Blockchain Cloud Platform,” AuraBlocks CEO Richard Brownstein tells SDX Central. “But they didn’t know how to put it all together. We designed technology on the Oracle Blockchain.”

It’s not just the merchants who benefit: “The analysis that was completed by our team reveals that implementing the AuraBlocks technology developed on the Oracle Blockchain Cloud Service could reduce our operational costs by 25 percent on a $1 billion book of business,” according to Venkatesh Bala, chief risk officer for Biz2Credit.

Early 2018 Use-Case: Fabric For Healthcare

In September 2017, Change Healthcare announced plans to go live with its claims-processing blockchain in early 2018. Change Healthcare’s Intelligent Healthcare Network is using Fabric for its application design and development.

The company calls this the first blockchain solution for enterprise-scale use in healthcare. According to HITInfrastructure, Change Healthcare will contribute code back to the open-source community so that other healthcare organizations can improve their blockchains.

Modular architecture

So what makes Fabric attractive? Flexibility, for one thing. The modularity of Fabric’s architecture enables network designers to plug in their preferred implementations for components, making it scalable and flexible.

Among the most requested areas for modularity is “bring your own identity,” according to IBM, “Some multi-company networks already have identity management and want to reuse instead of rebuild. Other components of the architecture that can be easily plugged in include consensus or encryption, where some countries have their own encryption standards.”

Other components that can be easily plugged in include consensus, membership services and encryption — important in cases where countries have their own encryption standards.

Ledger data can be stored in multiple formats and consensus mechanisms can be switched in and out. This last bit is especially important: It allows for a consensus mechanism that best represents the relationships that exist among participants. As with privacy, needs vary.

Private and  Transparent

Fabric aims to provide a balance between sometimes-conflicting goals: transparency and confidentiality.

Because Fabric is a platform for permissioned networks, all participants have known identities. That’s important, especially in highly regulated sectors like finance and healthcare: Regulations such as Know Your Customer (KYC) and HIPAA require knowledge of who the members of the network are and who is accessing data.

The permissioned blockchain (also called a consortium or federated blockchain) is a hybrid. Transactions are visible only to the parties with permission to view them — not the whole network. So, in Fabric, you could have a transaction visible to one person or a specific group of people, but not visible to others — something that makes sense for many businesses.

Transactions can remain private, but participants cannot be anonymous.

Compare this to a public blockchain, where everything is visible. Anyone can read the chain and write new blocks into it.

You can also use Fabric to build private blockchain networks. With this kind of blockchain, new nodes must either be validated by those who started the network or by a set of rules those people put in place. Private blockchains are generally best for applications that are internal to a single company.

Programmable Smart Contracts

Embedded logic in smart contracts — called “chaincode” in Fabric — can automate business processes and create massive efficiencies. Like Ethereum smart contracts, Fabric’s chaincode can be used to directly control digital assets using the conditions of an agreement. Enterprises are looking to offer smart contract functionality to clients in easy-to-use applications.

All Business, No Currency

Fabric doesn’t require a built-in cryptocurrency. None of the Hyperledger projects do — nor will they ever, at least according to Brian Behlendorf, executive director of the Hyperledger Project.

This decision distances Fabric from the lingering misconception that blockchain = bitcoin = dark web. Blockchain continues to move beyond cryptocurrency, but for many people, it still evokes something vaguely sinister.

“If you say ‘blockchain’ to most people, they immediately think Bitcoin — and still have no idea what it is,” John Engates, chief evangelist at Rackspace, tells eWeek.

It may be less sexy and less flashy than bitcoin, but that’s perfectly fine for enterprise customers.

“While cryptocurrency is not necessarily the future, it looks as though blockchain will be,” Carlo R.W. De Meijer, the founder, and owner of MIFSA, writes in the Dec. 31, 2017 issue of Finextra. “Those who nowadays persevere with their blockchain initiatives should not only be aware that the technology is still at a very early stage of development, but also understand that this isn’t really about technology, but about business.”

We couldn’t agree more.