The Pros and Cons of Hyperledger Fabric

Such is the case for Hyperledger Fabric, a relatively new business blockchain framework with roots at IBM. Fabric has several distinctive characteristics when compared to the other current blockchain models; whether those characteristics are advantages or disadvantages often depends on context.

But before we explore the potential pros and cons, let’s take a step back.

What is Hyperledger?

Hyperledger, according to the website, “is an open source collaborative effort created to advance cross-industry blockchain technologies.” The Hyperledger model is designed to allow organizations to build and run industry-specific blockchain applications, platforms, and hardware systems that support their own business transactions. To borrow the BlockGeeks description, it’s “something like a hub for open, industrial blockchain development.”

Hyperledger isn’t a tool or a platform; it’s the project itself. Often, it’s referred to as the umbrella. Hosted by the Linux Foundation, Hyperledger now has more than 180 members. Various industries are represented, including aeronautics, finance, healthcare, credit card services, supply chain, manufacturing and – of course – technology.

Unsurprisingly, given Hyperledger’s Linux home, open source is the core to its philosophy: “Only an Open Source, collaborative software development approach can ensure the transparency, longevity, interoperability, and support required to bring blockchain technologies forward to mainstream commercial adoption. That is what Hyperledger is about – communities of software developers building blockchain frameworks and platforms.”

The Hyperledger website lists five goals:

1. Create enterprise grade, open-source, distributed ledger frameworks, and code bases to support business transactions.
2. Provide neutral, open, and community-driven infrastructure supported by technical and business governance.
3. Build technical communities to develop blockchain and shared ledger POCs, use cases, field trials and deployments.
4. Educate the public about the market opportunity for blockchain technology.
5. Promote our community of communities by taking a toolkit approach with many platforms and frameworks.

Hyperledger incubates and promotes several business-related blockchain and distributed-ledger technologies, including five distinct frameworks: Fabric, Sawtooth, Burrow, Iroha, and Indy. It also maintains a suite of tools for deploying and maintaining blockchains, examining data on the ledgers, collaboration, and other functions. Those tools are Cello, Composer, Explorer, and Quilt.

Hyperledger Fabric 101

Hyperledger Fabric, the first framework to enter — and exit — the incubator, is the most mature of the various Hyperledger platforms. It also has the most active community of developers. Initially built as a project within IBM, it’s intended to be a foundation for developing blockchain applications with a modular architecture, allowing it to be plug-and-play.

As IBM describes it, Fabric “is designed to provide a framework for building enterprise-grade blockchain networks that can quickly scale as new network members join and transact at rates of more than 1,000 transactions per second among large ecosystems of users.”

Characteristics of Hyperledger Fabric Architecture

• Enterprise backing: With the likes of IBM, Intel and Cisco behind it, Fabric has strong backing from enterprise companies. This can provide a degree of stability, inspiring confidence in those who may still be unsure about blockchain’s future. On the other hand, some are leery of building applications on a platform whose development is so heavily influenced by large, established tech companies.
• Modular architecture: Fabric has a very modular architecture and provides a lot of flexibility in terms of what you want to use and what you don’t. A la carte, plug and play, or whatever you want to call it — this feature is definitely a pro.
• Private channels: Fabric’s distributed ledger and smart contract platform allow for private channels. If you have a large blockchain network and you want to share data only with certain parties, you can create a private channel with just those participants. Moreover, not every transaction can be seen by every user of the network. Fabric allows private transactions — something that isn’t possible in Ethereum, which fosters transparency. For certain highly regulated industries, such as healthcare, this is most definitely a pro. (See more on private vs. public, below.)
• Transparent process: The transactions may not be transparent, but the development process appears to be — which is a good thing. “At this stage, Hyperledger’s core teams have been tremendously willing to balance the needs to get important milestones with an open and transparent development process,” observed Skuchain founder Zaki Manian.
• Smart contracts: Like Ethereum, Fabric allows for smart contracts, called “chaincode.” Smart contracts, too, are definitely a pro.

No Coin, No Cryptocurrency

This could be a pro or a con, depending on your perspective: Unlike Ethereum, Fabric doesn’t require a built-in cryptocurrency. It’s possible to develop a native currency or a digital token with chaincode, but this would require a significant investment of development resources.

“You’ll never see a Hyperledger coin,” promised Brian Behlendorf, executive director of the Hyperledger Project. “By not pushing a currency, we avoid so many political challenges of having to maintain a globally consistent currency.”

Obviously, this sets Hyperledger apart from Bitcoin and Ethereum. “This decision strongly shaped the strategic goals of Hyperledger to build industrial applications of blockchain technology and sharply separat[ed] it from the get-rich schemes usually evolving from currency based blockchains,” BlockGeeks explains. “This might be more boring, but also more straightforward to the technology.”

In fact, the lack of a cryptocurrency makes it more it more practical for enterprise-level business applications, according to Saurabh Gupta, HfS Research’s chief strategy officer.

Ethereum vs. Fabric

To better understand Fabric, a comparison to Ethereum may prove helpful.

Ethereum, with its focus on decentralized apps (dApps), smart contracts and public blockchain, is more aligned with the business-to-consumer (B2C) market.

Meanwhile, enterprise companies wanting to develop blockchain apps with robust privacy and permission support are looking toward Fabric. It’s best suited for developing enterprise-ready blockchain apps using smart contracts with privacy and permissions support. Fabric’s modular architecture provides flexibility and is heavily targeted at businesses wanting to streamline their process by leveraging blockchain technology.

As CoinJoker puts it, “most enterprise apps would get tilted towards Fabric, whereas Ethereum would continue to be a hotbed for dApps that are more B2C.”

Hyperledger, with its tech giant backers, is focused exclusively on enterprise transaction-based applications. But Ethereum has its eyes on the enterprise clients as well.

Take, for example, JP Morgan’s Quorum, created and open sourced by JPMorgan. Quorum is a permissioned implementation of Ethereum; it’s what’s called a “fork” of the Ethereum public blockchain. Like Fiber, it doesn’t have its own cryptocurrency.

And then there’s the Enterprise Ethereum Alliance, which launched in February 2017. It includes more than 30 Fortune 500 companies, along with startups, academics, technology vendors, and Ethereum experts. Members include BP, Cisco, Accenture, Intel, and Toyota, and there’s considerable overlap in its membership and that of the Hyperledger Consortium.

Public, Private, and In-Between

Fabric is a platform for permissioned networks. That means all participants have known identities. IBM points out that many use cases — especially in the financial and healthcare sectors — require knowledge of who the members of the network are and who is accessing specific data. Transactions can still remain private, but participants cannot be anonymous.

To fully understand a permissioned blockchain, you need to understand public vs. private blockchains.

On a public blockchain, everything is visible. Anyone can read the chain and write new blocks into the chain, provided they follow the rules. Bitcoin is probably the most well-known example of a public blockchain.

Private blockchain networks are invitation-only. New nodes must either be validated by the person or persons who started the network or by a set of rules those people put in place. Private blockchains are best for applications that are internal to a single company.

So, back to the permissioned blockchain (also called a consortium or federated blockchain). It’s a hybrid of public and private. With a permissioned blockchain, 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 — which makes business sense.

For example, a consortium of banks might come together to share data with each other. The members can establish their own rules about how the blockchain operates. They can make the right to read the blockchain public or restrict it to themselves.

Or take supply-chain management. Each participant would have permission to execute transactions, and those transactions would allow everyone else in the blockchain to track where in the supply chain a particular item is.

This is especially important to enterprise customers, hence Hyperledger’s appeal. “Hyperledger Fabric is strongly tailored to enterprise customers, and offers a range of identity management solutions which integrate with industry-standard domain authority and enterprise trust systems. Whilst public blockchains focus on ‘trustless’ networks, Hyperledger is specifically tailored to meet the needs of business customers and is easily integrated into existing systems with a minimum of effort and complexity,” explains Sam Pospischil of Everledger, one of the Hyperledger consortium members.

It’s Still New

Fabric is the most mature Hyperledger technology project, but Hyperledger itself isn’t that far along. In fact, Fabric 1.0 was just released in July 2017.

Gupta identified some of the concerns this raises, identifying a ”lack of proven use cases, limited understanding of technology and its potential, limited talent and skill-sets shortage across IT and business, etc. The inherent power and potential of the concept with the help of some pioneering risk-takers will help pull it through such nascency challenges, but it will take time.”

Brian Behlendorf, Hyperledger’s executive director, doesn’t disagree. As he told Reuters, “If this were the web, what year would we be in? I’ve felt that we were in 1995, but with this release I am ready to say we are in 1996, when you started to see enterprises saying, ‘Now it is not just a research project.’”

Fabric’s creators acknowledge much is left to be done; they made this clear even as they announced the launch of Fabric 1.0. Take Chris Ferris’s comments: “Of course, it doesn’t end here. There’s plenty more work to be done, more collaboration and more innovation on tap from all of the Hyperledger projects.” Farris is chair of Hyperledger’s Technical Steering Committee and CTO of Open Technology at IBM.

Sorting it Out

Trying to decide which blockchain will work best for your organization? There’s no single blockchain that will solve every problem: Different types of blockchains are better suited to different needs and circumstances.

Need advice on which blockchain to use? Reach out to our team today.