Chapter 4. Hyperledger – Blockchain for Businesses

After understanding the architecture, core components, and the process of blockchain technology, it is important to explore the possibilities in regard to fulfilling business needs. Blockchain is responsible for running distributed networks without third-party regulators. It is now becoming an essential component to consider and this will shape the next generation of financial technology and governance models. However, blockchains used for cryptocurrency are highly focused on rewards and giving incentives to their participants, such as Bitcoin and Ethereum. To overcome this challenge, the Linux Foundation and industry leaders have collaborated to form a distributed ledger-based project named the Hyperledger project. In this chapter, you will learn about how the Hyperledger project is different from existing blockchain technologies, its core components, transaction flow, and turning up an application with Hyperledger technology.

You will learn...

Technical requirements

This chapter consists of a lab to demonstrate the Hyperledger application to solve real-life challenges in supply chain management. It is required that you have the source code from the following link: https://github.com/hyperledger/education.git.

Hyperledger overview

Hyperledger is an open source initiative focused on covering core industry needs with distributed ledger technologies. It's a group program hosted by the Linux Foundation in collaboration with several industry giants in information technology, banking, logistics, transportation, finance, manufacturing, and IoT.

Although cryptocurrency is still struggling to gain trust with several government and corporate bodies, blockchain is being adopted as a key to secure business operations and management technology. Because of the rigid and static nature of Bitcoin, it can't be used for business application purposes. Although Ethereum has the capability of turning up business applications with its smart contracts, because of its permissionless use cases, financial institutions and other critical business operations have hesitated to try the Ethereum blockchain.

Hyperledger is the only distributed ledger technology framework that was built to be granular for businesses that were in...

Blockchain-as-a-service (BaaS)

Since the birth of cloud computing, one of the hottest terms that has changed the way a product or a service can be delivered or deployed is X (anything) as a service, where X is any form of software or application. After the world recognized the immersive power of blockchain, industry leaders began to explore various possibilities of using blockchain with their existing cloud infrastructure models such as supply chain management, identity and access control, database management, and many more. Hyperledger resembles to the distributed ledger technology however blockchain technology has been taken a special focus in the ecosystem.

 With the Azure Blockchain service, Microsoft became the first software vendor to launch BaaS in 2015. Microsoft, in close collaboration with ConsenSys, announced that it was going to develop an Ethereum BaaS on the Microsoft Azure platform. SAP launched its own BaaS platform and named it Leonardo, which is a Hyperledger-based cloud...

Architecture and core components

Hyperledger is an open source framework that allows businesses to build enterprise-grade solutions based on distributed ledger technology. This framework consists of the following building blocks:

• Shared ledger: It is an append-only ledger, and it stores the blocks in chronological order
• Consensus algorithm: It's a method to achieve a common agreement over a change in the distributed ledger
• Privacy: The main purpose of building the Hyperledger was to achieve a permissioned network for secure and reliable transactions in mission-critical business environments
• Smart contract: This is a granular method to plan and process transaction requests

Let's understand the Hyperledger architecture:

• Consensus layer: This is mainly responsible for generating an agreement on each order and validating transactions based on a predefined set of rules
• Smart contract layer: This takes care of transaction requests and applying business logic
• Communication layer: This facilitates a platform...

Hyperledger Fabric model

The Hyperledger Fabric project is powered by the IBM blockchain platform and is hosted with the Linux Foundation, with its key highlight over confidential transactions being a permissioned network, programmable business login, and no need for cryptocurrency computational methods.

"We're seeing great results and actively preparing for the transition to 1.1.0. Our latest offering, the IBM Blockchain Platform Starter Plan, will be among one of the first products in the market to deliver on this new release"

—Jerry Cuomo, VP of IBM blockchain technology.

After getting an insight into Hyperledger Fabric and other projects under the Hyperledger project umbrella, it's time to understand the technology practically, and also see some of the challenges during its deployment steps.

Hyperledeger Fabric core components

After understanding the transaction flow, it is important to get insight into how communication is established and maintained among several nodes of the network:

• Nodes...

Bitcoin versus Ethereum versus Hyperledger

Blockchain is the most exciting innovation, and it is still popular in the cryptocurrency space. In the past few years, the industry has also recognized the impact of blockchain on their business model operation and management. Although blockchain technology works seamlessly in its native form, most of its business needs never fit the one-stop-shop solution. Hence, we have several versions of the blockchain network. Let's first understand their characteristics so that we can understand the comparison between some of the popular blockchain models in detail:

• Permission restrictions: This defines the eligibility of transaction processors to create or block the existing ledger. In this context, the following two models exist:
  • Permissioned blockchain: In this model, transactions processing can only be performed by preselected users. Hyperledger Fabric is an example of this.
  • Permissionless blockchain: This model doesn't restrict the transaction processor...

Hyperledger Fabric capabilities

Hyperledger comes with a full-stack, enterprise-grade business solution to deliver secure and scalable value with added security, confidentiality, and performance. Hyperledger Fabric delivers the following functionalities and core capabilities:

• Identity management: To turn a permissioned network, Hyperledger Fabric provides a membership identity service that maintains user IDs and then authenticates each of one of them in the network. One user ID can be allowed to invoke a chaincode application, but can be blocked to turn up a new chaincode.
• Efficient processing: Hyperledger assigns a role for each node based on transaction ordering and commitment. The overall performance improves as the concurrent execution increases and improves the time to deliver each order.
• Privacy and confidentiality: Private channels restrict the messaging paths to provide transaction privacy and confidentiality for specific network members. All data, including member information, transactions...

Lab

After understanding these insights into Hyperledger Fabric, with its architecture, components, transaction flow, and chaincode, it is now time to arrange each of these pieces in a lab. In order to keep the lab accessible, we are going to run a lab environment from GitHub hosted under https://fabric-sdk-node.github.io/.

Tuna application

The tuna application is about the transfer of tuna fish shipments between different parties in the supply chain. This entire application is written in Node.js, and gRPC is used to interact with the chaincode:

• Aim: Using the Fabric Node SDK, establish a connection with the Hyperledger blockchain. The peer will be configured to communicate to its application-specific chaincode container. By the end of this exercise, we will get familiar with how to use the Node.js SDK to communicate with the network. We will also gain an understanding of how an application chaincode network and ledger interact with one another.
• Basic installation: In case you haven't downloaded...

Summary

We explored a new breed of blockchain Hyperledger project, built to focus on business challenges and overcome the distributed ledger technology. Hyperledger is the only group project led and hosted by the Linux Foundation that is on a continuous roadmap to revolutionize business with the distributed ledger-as-a-service model. This project helps the industry to avoid difficulties in deploying blockchains, just like WordPress solved the difficulty of turning up a website and Apache solved the problem of turning up a database.

In the next chapter, we will understand how blockchain technology can impact on existing and traditional security models, named Confidentiality, Integrity, and Availability (CIA) triad models.

Questions

With the tuna application, we have successfully understood the workings and testing of Hyperledger Fabric. However, to solve the cyber security challenges, it is important that we explore existing solutions and how they can be made much better with distributed ledger technology or generic blockchains, or maybe even with Hyperledger projects. Therefore, it is important to cover the following points:

1. Can Hyperledger Fabric be considered for a public blockchain?
2. Can Hyperledger be connected with a traditional database?