Hyperledger — A Tsunami for Blockchain Innovation

“Yes, I love technology, but not as much as you, you see, but I still love technology always and forever” Kip (Napoleon Dynamite)

Don’t get me wrong; I love technology. Unfortunately, it does not always work in my favor. When I mention that my puppy needs a new water bowl (since my house is filled with listening devices: iPhone, Ecobee), somehow I get “water bowl” ads on my browser. This is an invasion of my privacy. I’ve also had my personal data compromised one or two times too many when some company can’t keep its data secure and their customers bear the brunt of their getting hacked. So I’ve been really interested in the evolution of blockchain technology, and finally, I have some faith that systems can be impenetrable (almost). The companies that are developing blockchain-type platforms are interesting to me both as a consumer and as an investor, and that’s generally a winning combo. So far, Hyperledger is one of the leaders of the pack.

How Blockchain Works: A Brief History

Before I go too deep on Hyperledger, let me explain blockchain as I understand it.  

It’s figuratively a chain. Use anything that links together in a chain for your metaphor, but blocks (as in building) seem to be the industry’s default image. Imagine these blocks are all data and are only useful in a specific order. The stored data in each block holds information about a transaction (like amount, date, and time), who is involved in the transaction (also called the digital signature), and unique data that differentiates this block from another block in the chain — a hash. So each block has this unique information, and it only works in its designated spot in the chain. What makes it so difficult for a malicious actor to break in is that each block is sort of siloed off, so it’s almost impossible to break into the chain and access all the data. 

Blockchain works like a transaction ledger, and the transactions build onto the last block in the chain, holding the data for contracts, sales, or anything else that involves a ledger. Here’s an example of how the blockchain ledger works from Fundera.com, and it’s the best one I’ve ever seen:

All the lemonade stands in Oakville use blockchain to process their transactions. All the users, buyers, and sellers agreed on the rules of the lemonade business and a price of around $2 a cup. 

John buys lemonade from my stand and pays me $2. I mark the sale on his copy of the blockchain, and all the other stands and buyers get a copy of the transaction, which adds to the end of the chain. 

Okay, what’s so special about that? 

The Impact

When John bought that lemonade from me for the low, low price of $2, the new block of data not only recorded the sale in the ledger, it verified the numbers. If a transaction posted that John had paid Sally $100 for lemonade, the transaction would be immediately flagged that either Sally is not a member of the citrus consortium, or she’s making up her own rules. Whatever Sally’s game, that copy of the blockchain ledger isn’t accepted by anyone else. It doesn’t meet the aforementioned rules. Sally can’t change the rules (aka the transaction record), so the information stored in the chain is not compromised. 

Hyperledger 

Hyperledger is an open-source blockchain project that’s really gotten my attention lately. Both Linux inventor Linus Torvalds and some of the biggest companies in the world have blessed it, and the Linux Foundation hosts this global collaborative network. If you’re not up to speed on open source, it’s a sphere where independent developers collaborate on technologies via an Open Source Definition (OSD) compliant license that allows them to use, study, change, and share OS software.

Hyperledger is focused on developing a framework for enterprise-grade blockchain deployment. Along with individual developers, the collaborative team involves service and solution providers, corporate members, government entities, and end users — truly a brilliant village tasked with developing game-changing solutions. 

Hyperledger Is the Blockchain of Choice for Large Companies

Hyperledger has built a suite of tools and libraries under the aegis of their Greenhouse, where all their technologies are planted and thrive. This is also where collaborating companies (Cisco, American Express, Airbus, Daimler, and Fujitsu, to name a few) go to pick the tools that best suit their needs for a given project. It’s a cheesy analogy, I know, but the Greenhouse houses all the great technologies. 

These global leaders in their respective industries have chosen Hyperledger for their blockchain for several reasons, but here are the ones that I think are the most important.

Expert Development Support

Hyperleder Fabric is the modular blockchain framework that is the standard for enterprise-scale platforms. Fabric’s unique consensus algorithms enable performance at scale while maintaining the data privacy that enterprise demands. Open source development keeps Fabric nimble (I’d say agile, but that’s a whole different technology) enough that innovation is implemented at unheard-of speed. Users get a new level of transparency. 

Enterprise-Scale Security and Resilience

For Hyperledger Fabric to run at an enterprise scale, companies need commercial distribution for open-source software. IBM, in partnership with Hyperledger, has built a platform that manages complex operations and ensures privacy within enterprise networks, allowing users to customize the levels of security and resiliency via robust High Availability and Disaster Recovery. 

Even in the cloud, there has to be some hardware somewhere. Hyperledger and IBM have developed hardware security modules (HSM) that give companies the option to store private keys on a physical device. It doesn’t have to be an old IBM mainframe; any device can store and manage that data. 

Flexibility

Hitting enterprise-level functionality demands the flexibility to scale. Hyperledger platforms allow users to connect to nodes that are running in any environment. They support both open source and community nodes in conjunction with deployed blockchain nodes. Basically, you can run all your systems simultaneously. 

Agnostic Cryptocurrency

At the moment, Visa has several crypto debit cards offered, so expect digital cash to just grow in the future. Smart blockchain companies are going currency agnostic, meaning they don’t favor any one over the others. 

The Benefits of a Permissioned Blockchain 

As with anything in life, there are levels of blockchain. The elite level, if you will, is the permissioned network. This is the innermost circle of the network. The participants know each other and have a vested interest in the consensus process. These private network nodes allow the permissioned team to share data with a higher degree of security. Also, they can deploy solutions without having to go through the proof of work hoops that are consistent with a public blockchain. 

Think of the blockchain as an ecosystem, with the network nodes comprising the environment. When people deploy blockchain to record data — transactions, trades, IOUs, even grocery lists — everyone in the network has a copy. Even better, no one can ever edit or erase the data. This is the information that never goes away. Every business in the permissioned network always has a ledger copy that is identical to all the others. 

Permissioned blockchain has another layer of security via an access control layer. This limits some action execution; only identifiable participants can perform them. These are the blockchains of choice for enterprises that demand identity, security, and role definition within the chain. 

Why IBM Uses Hyperledger

IBM, which doesn’t jump on any old bandwagon, has invested in blockchain since its beginnings. But it has really taken to Hyperledger. They built the code base for Hyperledger Fabric. Then they turned it over to the Greenhouse in 2016 when Hyperledger moved under the purview of the Linux Foundation. IBM remains an active and permissoned-level participant in the open-source, open governance sphere, which has become the default DLT technology in the enterprise blockchain environment. It’s a feather in IBM’s somewhat hidebound cap to be hanging with the cool kids by the blockchain. They have integrated the gee-whiz technology of Hyperledger Fabric into their business model so that they remain relevant in the tech space going forward. 

Hyperledger Enterprise Examples

There’s Hyperledger technology happening in your daily life. You’re part of the greater blockchain project when you simply participate in life. 

Visa’s international payment platform deploys Hyperledger Fabric for B2B Connect, its corporate transaction service. Transactions happen faster and with less fraud.

Hitachi, the Japanese tech behemoth, has designed a Hyperledger-based system for processes from fingerprint-verified payments to digital coupon activation. A distributed ledger keeps the transaction records. 

Oracle also implemented a Fabric-based DLT to monitor and control supply chains, leaving Larry Ellison more time to spend on his boats. 

And Watson, IBM’s AI technology, offers developers a software development kit for building Internet of Things (IoT) applications. 

Honeywell Aerospace and the Parts Marketplace

I like what Honeywell Aerospace has done with the Hyperledger Fabric platform — it shows serious ingenuity and innovation. It turns out that there’s no Rock Auto for finding airplane parts. Procuring parts was a wild wild west endeavor. Basically, if United needed a piece of landing gear for an older plane, they went to airplanepartsrus.com and hoped for the best. A plane could stay grounded for weeks while the purchasing team sourced parts. 

The Honeywell team built an online marketplace for airplane parts, GoDirectTrade.com, and has cut the purchase time to a few days. The marketplace lets sellers post their documented and verified parts online. Then it racked up $1 million in sales in the first ten weeks online. Granted, a wing flap has a higher price point than a brake pad. But those are strong numbers for such a new idea. 

The point is that Hyperledger can streamline your innovations with unheard levels of security and transparency. These are not concepts that generally coexist well, but they do here. Do you agree? Please let me know if you love technology like Kip!