Enterprises need to ensure a significant level of security, privacy, compliance, and performance. These processes are very complex and time-consuming. Problems frequently emerge with data incompatibility or lack of trust. How can Hyperledger Fabric help in such situations?
Blockchain is a distributed, decentralized public ledger. To picture it, it can be described as a constantly growing list of transactions stored on devices on the network called nodes. Cryptographic protocols connect the nodes and keep transactions confidential.
All the data on the blockchain network is visible to users, and each is responsible for their actions. Data is immutable and not controlled by one central authority. But what happens when we want to use blockchain for business so that we need to certify authorities and control who is in our network, and we want to keep all our data confidential from the outside world? One thing is for sure – in such a case, a public blockchain network won’t be suitable; you need a private network. To create blockchain applications meeting the above requirements, it’s best to use enterprise blockchain platforms.
What are private blockchain networks, and what are their benefits
Private blockchains are a version of blockchain technology that can be either open-source, consortium, or privately developed. There is a wide range of private blockchain platforms, but the most popular ones are Hyperledger Fabric (sometimes shortened to Fabric, or HLF) hosted by the Linux Foundation, and R3’s Corda.
Joining a private blockchain network
One feature that sets private blockchains apart is that participants can limit or grant permission to access this blockchain network. This is why it is also called a permissioned network. Network administrators have to invite you to join the enterprise blockchain. Limiting access to the network and implementing proper identity management ensure private transactions. Only entities participating in a transaction will know about it. “To achieve a higher level of privacy, it is sufficient to specify user identities, limit read permissions, and certify authorities. These measures provide a high level of data protection.
Transaction scalability across the network
Hyperledger Fabric is an open-source blockchain; its scalability depends on many factors. Software infrastructure design and complexity impact performance. The Hyperledger Foundation claims that its private blockchain is more scalable and allows more transactions per second than public blockchains. A 2019 study by Christian Gorenflo, Stephen Lee, Lukasz Golab, and S. Keshav even states that it has achieved a fantastic transaction flow of up to 20,000 business transactions per second.
One significant tradeoff for higher transaction processing rates is that private blockchains are more centralized, permissioned networks. Rather than public proof-of-work consensus, which Bitcoin and Ethereum use, Hyperledger Fabric networks use the Raft consensus algorithm.
Consensus in Hyperledger Fabric network
To reach consensus in HLF, you need an odd number of nodes, and there needs to be a simple majority of those working to confirm transactions. For example, if there are seven nodes in a network, four would need to be working to verify new transactions. However, having such a limited number of nodes also comes with risk.
Blockchain developer Tomasz Kaliszuk explained that “Raft [consensus] might lose more nodes, and it will continue to work. It is an approach to a consensus that enables actors in a network to gain a lot of power — so be sure it’s someone you trust. It is less secure because it does not protect against ‘bad actors,’ meaning ‘bad nodes,’ so it’s essential in enterprise blockchains to trust that such bad users will not gain access. Raft, however, is faster, much more scalable when it comes to network expansion.”
When designing blockchain systems based on Hyperledger Fabric, we approach it from a technical point of view using its built-in components like chaincode and ordered. But we also approach it from the perspective of business logic. We try to understand how our client’s business works, what problems we are to solve, and how we can combine technology and business to optimize processes and bring tangible benefits.
What is Hyperledger Fabric blockchain platform– need-to-know basis
Hyperledger Fabric supports transaction validation. This blockchain network is characterized by a modular architecture that breaks down transaction processing into phases. This separation is intended to optimize network scalability and performance.
Permissioned blockchain ledger and smart contract model
Distributed ledger technology includes blockchain technologies and smart contracts called chaincode. Moreover, we can build a traditional application using, for example, node.js technology and use blockchain as a layer for synchronizing, processing, and securing data. That can work well in the context of financial sectors, for example.
Secure transactions based on blockchain infrastructure
Using Hyperledger Fabric allows a high level of security. The blockchain framework raises several concerns related to competitiveness, protection laws, rules regarding confidentiality of personal data, the risk of data leaks, and the management of private data. All of them can be mitigated thanks to partitioning the data in the network that is also available in Fabric.
Use case of Hyperledger Fabric blockchain technology for business
I want to present the case of our recent Hyperledger project. On the high-level architecture above, you can see the structure of the decision-making business processes before the implemented changes. Making and confirming a decision or approving a document requires that all parties communicate with each other to agree to the changes at the same time.
Communication between the systems of partners or branches in one organization was processed without a central trusted data source that would guarantee that the transaction details confirmation of all members of this network would be fast and saved information in the database would be the same. This structure’s convoluted and time-consuming.
Central database solution pros and cons
As shown in the diagram above, we can add a back-end system with a database as a central solution. This solution could improve the process between participants in business networks like this one. However, we still have a problem with distrust and a lack of immutable data. The data transferred between participants can be changed without the consent of the settling parties, resulting in a potential asymmetric version of data in at least one of the system participants. The lack of trusted data affects future transactions and will not resolve our problems. The optimized, centralized database could be faster and easier to search in than decentralized solutions.
Distributed network pros and cons
Data immutability and trustless data exchange were essential; we decided to use DLT as a private blockchain infrastructure with intelligent contracts to resolve these problems. The blockchain will become a root of trust that makes communication between peers symmetrical and eliminates levels of trust fluctuations or its complete lack.
A private blockchain is the most relevant solution in this use case. We solved this problem with smart contracts and created a blockchain network – Hyperledger Fabric decentralized ledger technology is one data source in which all saved changes are visible to users. Each participant in the blockchain network can be transparent with others.
By implementing the private blockchain as distributed ledger framework, the client gained one common root of trust – a database with consistent data, which solved the problem of lack of trust. By optimizing current manual or semi-automation processes, decision-making time has been shortened, which also reduced the costs of the process and decision delays.
We are helping various businesses with powerful enterprise blockchain solutions based on Hyperledger Fabric. Contact us, and one of our experts will get in touch with you.