Blockchain Infrastructures for the Enterprise: Thinking Beyond Cryptocurrencies
In recent years blockchain infrastructures have gained momentum due to the rise of blockbuster cryptocurrencies such as Bitcoin and Ethereum. Blockchains are typically distributed ledger infrastructures, which settle transactions that involve digital assets in a fully decentralized way that obviates the need for a trusted third party such as a bank or a notary public. In most cases, such decentralized infrastructures come with excellent security features that protect transactions against tampering, fraud and cybercrime. This is the reason why blockchain networks are currently considered for a host of different applications beyond cryptocurrencies, notably applications that entail secure data sharing and robust transaction management across networks of different organizations. Conventional public blockchain infrastructures such as Bitcoin and Ethereum fall short when it comes to supporting such enterprise applications, as they offer very poor performance (e.g., they cannot support hundreds or thousands of transactions per second) and do not provide proper authorization and access control features. To alleviate these limitations, organizations are resorting to a different type of blockchains, namely permissioned distributed ledgers.
Permissioned blockchains are much better suited for enterprise scale applications, since they offer the following benefits and improvements over conventional public blockchains:
The advantages of the permissioned blockchain infrastructures have given rise to the emergence of entire platforms that enable the setup and operation of such private networks. Hyperledger Fabric, Corda R3 and Quorum are three very prominent examples of permissioned blockchains.
Hyperledger is an open source project, which is supported by the Linux Foundation. It is empowered by an active and vibrant open source community, which has developed many blockchain applications. Hyperledger has been founded by a consortium of seventeen (17) companies and is currently supported by 130 members all around the globe.
Hyperledger Fabric is a specific project of the Hyperledger community, which provides a novel framework for implementing permissioned blockchains. The Fabric has a modular architecture, which enables pluggable and interchangeable services based on container technologies (e.g., Docker). It enables many different use cases in a variety of industries, given that is can support a wide array of different requirements. Hyperledger Fabric facilitates the development of permissioned blockchains, which offer identity verification in the scope of confidential transactions. Moreover, it enables the implementation of power efficient PoW schemes, while supporting scalable, secure, high performance and auditable applications over shared ledgers.
Corda supports transactions between identifiable parties with known legal and privacy characteristics. Its main difference to other permissioned blockchain networks is that it enables the co-existence and interoperability of applications from different groups. To this end, it offers a unique governance model that reflects the common interests of the diverse participants. The development of Corda has been motivated by the needs of the finance sector and more specifically by the need to manage contracts across different firms and individuals in cases where the various parties trust each other in order to trade, but do not trust each other to keep the entire records of the transactions. The latter requirement asks for a decentralized mechanism for keeping, resolving and auditing transactions. In practice, Corda is very much focused on supporting applications for the finance and insurance sectors. In particular, typical applications of Corda include payments such as Instant Money Transfers, transfer of payments and assets in equity trading, as well as collaboration in the scope of syndicated loans.
Driven by the popular Etherium distributed ledger infrastructure and its support for smart contracts, the blockchain community has recently introduced Ethereum-based distributed ledger protocols, which offer contract privacy and new consensus mechanisms. These protocols empower Enterprise Ethereum blockchains such as Quorum. Quorum has been developed by J.P. Morgan in order to handle use-cases requiring high-speed and high-throughput processing of private transactions. As a permissioned blockchain, it operates on the basis of a closed group of participants and without complex PoW consensus algorithms. Instead of conventional PoW, it employs other algorithms (e.g., voting schemes and raft-based consensus), which allows it to support hundreds of transactions per second. Quorum is a derivative of Ethereum and as such it integrates the vast majority of Ethereum features and updates. In practical terms, Quorum is a fork of the go-ethereum project and keeps up with the go-ethereum evolution and releases. Similar to the Fabric, Quorum is free and open source, which encourages research and experimentation over it.
Despite their differences, all of the above-listed permissioned blockchain offer some common characteristics that make them suitable for enterprise deployment. These characteristics include the support for a much larger number of transactions per second than conventional public blockchains (e.g., both Corda and the Fabric report support for thousands of transactions per second), as well as the support for smart contracts. The selection of a suitable blockchain infrastructure for a given application depends however on many other factors as well, such as the scalability and the security features of the blockchain, as well as the size and activity of the community that supports each one of the above listed open projects. Nevertheless, the fact that blockchain deployers are offered with alternative choices is positive and makes it possible to support more specific requirements of blockchain applications in different vertical industries.
In an era of blockchain hype, developers and deployers are offered with different options for developing their permissioned distributed ledger infrastructures. Most of these options ensure privacy control, performance and support for Ethereum-like smart contracts, which simplifies application development and compliance to stringent requirements. Prior to kick-starting your permissioned blockchain project, it’s probably worth evaluating the different blockchain infrastructures and the level at which they could meet your needs.
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