What is Hyperledger Fabric and how it works?

Hyperledger Fabric is an open source and modular framework thats  was launched by the Linux Foundation in 2015. follow us in this article to more know about Hyperledger fabric, its usecases  and how it works.

What is Hyperledger Fabric?

Hyperledger Fabric is one of the most popular distributed ledger (aka. Blockchain) protocols. It provides support for private transactions and confidential contracts, unlike traditional blockchain networks. These issues are of utmost importance for businesses, which resulted in the design of Hyperledger fabric as a response. Being a modular, scalable, open-source, and secure foundation is the key for this blockchain protocol to become a global solution for businesses.

What makes Hyperledger Fabric different from some other blockchain systems is the fact that it is private. The support for membership-based permission system allows the ability to verify the identity of participants. This ability is a primary requirement for a business sector, as it allows them to control data access for each member specifically. A lot of business sectors, like health care, finance, and education, need this ability, and if a protocol system doesn’t support it, it’s enough for them to not use it.

How does Hyperledger Fabric work?

Modular architecture

Transaction processing workflow

 Hyperledger Fabric uses a three-stage transaction processing workflow. These stages are:

1-            distributed logic processing and agreement of the system

2-            transaction ordering

3-            transaction validation and commitment

Smart contract: This processing workflow is a smart contract system called chaincode. Smart contract is a self-executing contract system with the terms of agreement being directly written into the code. The code – which exists in the blockchain network – controls the execution of the transaction. It’s irreversible and trackable.

Benefits of this workflow

 This workflow segregates the aforementioned steps for multiple reasons, including:

  • A reduced number of trust levels and verification that keeps the network and processing clutter-free
  • Improved network scalability
  • Better overall performance

Plug-and-Play

 Hyperledger Fabric supports the Plug-and-Play of different components, which allows the reuse of already existing features and ready-made integration of various modules. This means, for example, if an enterprise-level network already has a function for a specific action – like verification of a participant’s identity – they don’t have to make the function from the scratch. Instead, they only have to plug the existing module and reuse it.

Roles of participants in the network

 There are 3 different roles for participants of the network. Endorser, Committer, and Consenter. The process of a transaction has 4 levels in the first stage, 2 levels in the second stage, and 1 level in the final stage. These 7 stages are:

  • Application submits a proposal to the endorsing peer.
  • Chaincode (the smart contract) will be executed to simulate the proposal in peer.
  • Endorsing peer sends the response of the proposal back to the application.
  • The application submits the transaction to the ordering service.
  • The ordering service creates a batch of transactions.
  • The ordering service sends the batch to the committing peer.
  • Committing peer validates transactions and commits block to the blockchain.

This system also enhances the performance and scalability of the network thanks to only sending confirming instructions – signatures, read/write sets, … – across the network. Only committers and endorsers can access the transaction, which further increases security by limiting the participants who have access to key data points.

Benefits of Hyperledger Fabric

There is always a reason why someone designs/invents something new. And this technology is not an exception. Finding the issues and improvement headroom of the predecessor technologies and solving them, will lead to the benefits of using the successor technology. Hyperledger Fabric has several benefits over traditional some other blockchain services which some of which are in the list below:

Permissioned network 

A traditional blockchain is built upon several anonymous participants of an open network. While Hyperledger Fabric Establishes decentralized trust in a network of known participants. This means the blockchain is not publicly accessible and only verified users have access to it. The users can only perform specific actions that the administrator granted them their access.

Confidential Transactions

 Confidential Transactions keep the amount and type of assets transferred visible only to participants in the transaction. In other words, it makes you able to expose only the data you want, only to the parties you want.

Pluggable architecture

 You can tailor your blockchain network to your needs thanks to the plug-and-play structure of Hyperledger Fabric. This means you don’t have to make a one-size-fits-all network. And also means you don’t have to make all the functions from the scratch – as said before -.

Easy to get started with Hyperledger Fabric

 Program the required smart transactions the way you want. With the language you and your team work with. There is no need to learn new/custom languages for the sake of working with this service.

You can get some of these benefits with traditional centralized networks unlike some other types of blockchain networks. But you have to leave the base benefits of blockchain behind. With Hyperledger Fabric you can get the most benefit from both types of networks.

Industry Use Cases for Hyperledger Fabric

Like any other innovation or new technology, it takes time for the value of Hyperledger Fabric to finally emerge. But at the moment, there are still a lot of real-life uses for this private blockchain network.

Tamper-proof audit trail

Tamper-proof audit trail – as the name explains – means your data is secured against tampering. But when does tamper-proof auditing matters? For example, when tracking invoices, settling internal payments, managing referrals, managing access to records, or tracking supply, tamper-proof auditing plays its role.

Managing data access

 Keeping track of records and who has access to them, is one of the many use cases of the feature – Tamper-proof audit trail -. In an example implementation, consider an app that manages medical record storage for patients and doctors utilizing Hyperledger Fabric. Patients use their private key to access a “patient” portal and can grant and revoke access to doctors. Doctors also use their private keys to enter their “doctor” portal and add or edit records and procedures of a patient who previously granted them the access.

Tracking supply chain network and origin

 One can also use tamper-proof audit trail to track a supply chain. Blockchain can be a big technological leap for supply chain related businesses. Take a pharmaceutical supply chain as an example. In this example, we will explore the role of a blockchain-based platform in digital interactions that allow us to track the shipping of a product. We have to make sure the product has been shipped from a valid source and has traveled through the supply chain in the right condition. Counterfeited drugs and or mishandling of them cause billions of dollars of loss to big pharmaceutical companies each years; Thus making the tracking of supply chain an important process.

Hyperledger Fabric in Financial settlement

 One of the very first use cases of blockchain was amongst the payment related businesses. Transferring money as quick and as cheap as possible is one of the simple examples of utilization of Hyperledger Fabric for financial settlement. Cryptocurrency enables real-time money transfers anywhere in the world. Thanks to cryptographic guarantees, blockchain simplifies the process of peer-to-peer payment by making sure the users can’t spend their tokens twice. Double-spending is problem that if not using blockchain, needs the use of third-party financial institutions – like banks and credit rating agencies – to be avoided.

This advantage, thanks to removing the need of third party, makes the process of transaction of money much faster and saves your money from being paid for operating costs. And here come things like hyperledger fabric for things like internal settlements.  This service offers a way to carry out and manage payments between an organization’s branches or between close partners. An open and transparent blockchain solution helps organizations to ensure trust and create a transparent record. So the participants of the network can see where a transaction goes and why it goes there.

Invoice processing

 Invoice processing, due to its complexity, can cause trouble for large organizations that have a lot of offices around the globe. Yet to this day, some organizations or some of their branches still do it manually. Which of course, can get too complicated and take a lot of time; And we are not even talking about the potential errors within the process. On the other hand, centralized record-keeping software can reduce the transparency of the process, and even cause chaos when the organization doesn’t grant the access to other related participants of the network. Meanwhile, using Blockchain enterprise systems such as Hyperledger Fabric brings a perfect level of transparency, allowing all participants to observe any modification on the records or any addition/removal.

Commission Management

 Hyperledger permissioned blockchain projects can also help with the tracking of commissions and show a clear history of accepted works and its payments, just as good as it helps with the processing of invoices in an efficient manner. Especially for conglomerate companies that operate in multiple countries across the world, this can be a useful network system as the solution; Because such companies always struggle with referral payments and the management of their commissions. Whether a company has a partner who uses a different accounting system, or the partner provides the data in a low-quality (probably with a lot duplicates) shape, or maybe even intentionally misrepresents the commissions, an application which utilizes Hyperledger Fabric can help the company to establish the order.

Enterprise blockchain for contract validation

 Companies that have many branches and a lot of partners can make their ecosystem using a private blockchain network such as Hyperledger Fabric. Today, doing things like issuing an invoice or renewing a contract, it’s either manual or a semi-manual automation. Companies who don’t use blockchain have to integrate multiple systems and fight data silo problems (= when one information system or subsystem is not capable of reciprocal operation with others). While with blockchain, you will get a unified place to store all your information in a consistent and transparent approach. Furthermore, blockchain smart contracts can be used to trigger new automatic actions when the contracts expire. The smart contract’s behavior can be adjusted for specific asset types and treat product and service delivery different than inventory sales.

You can also combine other features like invoices and internal payment to your contract validation feature. As always, one of the biggest challenges that large companies struggle with is transparency and trust between parties. And as always, a private, permissioned blockchain, together with traditional IT solutions, can resolve these problems.

Blockchain-based time-sensitive distribution

 From the beginning of the pandemic of Covid-19 in 2019, scientists began to find a solution to lower the rate of spread of the virus to almost zero. The introduction of various vaccines was the solution as expected. The problem came up when the demand raised too much – although it was expected -, traditional distribution system could easily fail to find potential frauds and counterfeits which caused by the high demand. It also was not as time-sensitive as it should have been and could cause a lot of losses in the number vaccine dozes; Especially considering the pricelessness of them at the early stages of the vaccination.

And this is how blockchain solved all the aforementioned challenges at once. Tech Mahindra – an Indian multinational IT services and consulting company – has made an interesting Hyperledger Fabric based system, called VaccineLedger. VaccineLedger was actually developed in cooperation with a startup funded by Unicef and Gavi (an international organization to improve access to new and underused vaccines for children living in the world’s poorest countries). Thanks to this new system, distribution and monitoring of the vaccine can be done with precise information on the logistics, temperature, current location, purchase orders, and transport conditions, leading to a smooth operation. Read more about VaccineLedger in Forbes

GreenPlus Hyperledger Fabric

GreenPlus Managed Blockchain is a fully managed service that allows you to set up and manage a scalable Hyperledger Fabric blockchain network with just a few clicks. Managed Blockchain eliminates the overhead required to create the network, and automatically scales to meet the demands of thousands of applications running millions of transactions. Once your network is up and running, Managed Blockchain makes it easy to manage and maintain your Hyperledger Fabric network. It manages your certificates and lets you easily invite new members to join the network.

Get started building a Hyperledger Fabric blockchain network in minutes with Greenplus  here.

 

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