Blockchain for business: A look underneath the hood of the architecture that makes it possible

In recent research efforts to understand the performance characteristics of Hyperledger Fabric compared to permisionless blockchains, the scientists at the IBM Research Lab in Zurich dove deep into the tens of thousands of lines of code that make up the enterprise blockchain framework. Not only did they reveal initial performance potential of more than 3,500 transactions per second with sub-second latency, they also shed light on the philosophy behind the architecture that made blockchain real for business.

Why Blockchain for Business?

Widely known as the technology underlying cryptocurrencies, blockchain in its early days was often associated with anonymous transactions. Quickly, business leaders and corporate R&D departments realized the same qualities that made blockchain attractive to bad actors – its ability to settle transactions efficiently, the solid, trusted networks it built and its reliance on strong encryption – could be a boon to legitimate enterprise transactions as well.

Businesses worldwide transact,exchanging something of value, whether it's luxury goods, produce, or bank loans. No matter the exchange, blockchain can instil trust among transacting partners, deploy smart contracts to settle transactions automatically in seconds, and provide transparency into a transaction's status.

As a result, business adoption of blockchain technology is strong and growing. We're seeing blockchain use cases take off in industries from government, to travel and transportation, to supply chain and logistics. Each of these industries require an approach to blockchain that provides security, privacy, resiliency, scalability and efficiency, however, not all blockchains are created equal. IBM, in close partnership with more than 200 organizations that make up The Linux Foundation's open source project, Hyperledger, set out to build the right architecture for enterprise blockchains.

Building a Better Blockchain

Hyperledger Fabric is one of the Hyperledger projects hosted by The Linux Foundation and provides a resilient, extensible and scalable blockchain framework– one that is suitable for enterprises. This flexibly-designed blockchain protocol can be tailored to particular use cases, trust models and network configurations.Several design elements enable this:

Built-in permissions. Hyperledger Fabric is a permissioned blockchain framework. As opposed to permissionless architectures, which allow members to stay anonymous, Hyperledger Fabric enables secure interactions among a set of known, identified participants who share a common goal, but have not yet established trust with each other.

Permissioned blockchains are required specifically for those industries that are subject to heavy regulations, such as banking, insurance, healthcare, government and more. Permissions, and the ability to know the identity of all transacting partners, are essential for these organizations for audit and contracting processes.

A new approach to consensus. Blockchain networks typically rely on consensus among participants to execute transactions. By relying on the identities of peers, a permissioned blockchain like Hyperledger Fabric can use Crash fault-tolerant (CFT) and Byzantine fault-tolerant (BFT) consensus protocols, in which participants work together around a common cause or goal, such as sharing patient data securely.

Traditional consensus mechanisms, called Proof-of-Work (PoW),incentivize participants to solve complex mathematical problems in order to participate, or achieve consensus. This method also requires substantial computational power for "mining," which consumes enormous amounts of energy. The method used by Hyperledger Fabric requires far fewer resources and does not use mining, making it more efficient for business, and sustainable for the planet.

Flexible execution. Blockchain platforms – both permissioned and permissionless–typically follow a sequential execution style, meaning that transactions on smart contracts are executed after or as consensus is reached and where all participants execute all contracts. The problem with this is that it limits a network's scalability, so that the number of participants must remain fixed, even if transactions require more participants.

Hyperledger Fabric uses a different architecture that supports scalability and flexible trust assumptions. Using an execute-order-validate architecture, it lets transactions execute before the blockchain reaches consensus on their place in the chain.

Native language programming. Hyperledger Fabric allows users to run applications written in general-purpose programming languages (such as Go, Java, Node.js), without depending on a native cryptocurrency. This is a significant advancement from many permissionless blockchain platforms, which require code to be written in a domain-specific language that requires specific training and are tied to a cryptocurrency.

Flexibility as a hallmark. Founders of security-sensitive networks can add an additional layer of permission through the platform's identity management service. As an example, a specific user ID could be permitted to invoke a smart contract application but be blocked from deploying a new one. Levels of customizability like this are essential for any type of business network, and are built into Hyperledger Fabric.

Evaluating Fabric Performance

Since Hyperledger Fabric does not use mining or a token, it can be difficult to make performance comparisons with token-based blockchain networks. To help address this concern, a conceptual token in Hyperledger Fabric was created as part of an experiment and for the sole purpose of modelling transaction performance.

The results showed that Hyperledger Fabric deployed in a single cloud data center achieves an end-to-end throughput of more than 3,500 transactions per second with sub-second latency.

IBM recognizes that tokens have strong applicability to certain use cases. We are open to leveraging appropriate tools and capabilities to address the growing needs of enterprise clients. More than that though, the results uncovered by these researchers gives the industry a sense of Hyperledger Fabric's performance and how to iterate moving forward. As Hyperledger Fabric becomes increasingly developed and customized for the enterprise, this performance underscores that blockchain truly can be an ideal enterprise technology, but to truly scale and have a transformational effect,must be done in a way that works for business.

Fostering open collaboration, open governance and open innovation has been Hyperledger's mantra from the start, and it's this philosophy that has allowed blockchain to take root in the enterprise. Its trajectory is dependent on dedicated organizations joining to further build and promote the technology. Demonstrating the strength and performance potential of the Hyperledger Fabric framework helps prove why it's worth getting behind.