How Hyperledger nudges business interest in the blockchain » Brave New Coin

Blockchain technology has brought together a unique combination of three computer concepts: peer-to-peer networks, public-key cryptography, and distributed consensus mechanisms.

In the multitude of applications, the blockchain is dispersed into several interest communities. Certain projects, like Bitcoin, are focused on creating fully-open technologies available to everyone on the web who wants to test, build upon and use an alternative digital currency on an open blockchain.

A second group, including decentralized applications (dApps) build on the Ethereum Virtual Machine (EVM) by solidity developers, offering a permissionless technology for developing smart contracts; pretty much offering an absolute openness and privacy to the participants. You need to be adept in particular skills, such as programming in the Solidity language, if you want to build dApps on Ethereum.

Then, there is a third group of blockchain innovators, trying to overcome the common problems of unrestricted decentralization. They aim at developing “bottleneck decentralized solutions”, where business partners would welcome each other to create trust and perform exchanges on the basis of the KYC (know-your-customer) concept. Hyperledger by the Linux Foundation belongs to the latter group. If you are thinking about learning how to build a client base on the Hyperledger that will actually use blockchain in business, your Solidity development skills may be a good place to start. However, they won’t be nearly enough, as the framework has its own code called Chaincode.

How Hyperledger can create a business community 

There are unprecedented advantages to Hyperledger. It is based on the open-source coding concept, where blockchain developers meet with industry experts and business clients to establish a neutral community. The community discusses, finds and promotes creative outcomes based on the distributed ledger technology. Hyperledger’s infrastructure for the enterprise blockchain welcomes three layers of members who can contribute as much as they are willing and able to, in turn picking up the benefits that will advance and enhance theirs and other people’s businesses.   

Despite the critique for placing restrictions to what should be a totally decentralized way of exchanging digital values (the core of blockchain), it’s not too difficult to understand the business logic behind permissioned blockchains or permissioned distributed ledgers. Distributed ledgers that use permissionless distributed ledgers take longer to develop since they require absolute node consensus, which means everyone in the network must confirm that they are fine with a change in the facts. Imagine a manager who would need to ask all branch managers (or employees) in a global corporation whether they agree with 10 percent reduction in transport allowance for branch X; the time it will take to confirm this fact in a fully distributed ledger cannot justify the costs or the time invested.   

As a general rule, entrepreneurs build businesses and communities with vested interests. It’s impossible to bring everyone on the same page. On the other hand, it’s beneficial to implement mechanisms that speak a digital language of trust that most players in an industry can relate to, at the same time reducing the time and the costs for unnecessary work. Hyperledger Project is made with the intention to balance the permissioned vs. permissionless, by extracting the best from the distribution and the worst from scalability, as well anonymity in shared networks.

Hyperledger: Invitation-only with no cryptocurrency

Hyperledger builds permissioned distributed ledgers on the basis of an invitation. In this way, it is not much different than the traditional exchanges of goods and services, where identities are managed via some previous source of trust.

This cuts down the time for completing a transaction because not each node in a network needs to supervise and confirm the change. Unlike blockchain’s anonymity and lack of confidentiality, Hyperledger uses confidential modular software architecture. It provides simple APIs that businesses can transform and use to improve specific operations. The code modules built on the Hyperledger projects are interoperable and different from the Ethereum code based on solidity development resources. Perhaps the most striking difference between Hyperledger on one side, and Bitcoin and Ethereum on the other is that it doesn’t own a cryptocurrency.    

What are the processes of Hyperledger?

  • It uses a consensus-as-a-service mechanism – a key attribute of a distributed ledger systems – in which the majority of the participants in a network need to agree about the state of a ledger on the basis of previously agreed set of immutable factors, rules and criteria.
  • There are three types of transactions in the Hyperledger’s architecture used to execute operations: deploy, invoke and query. What blockchain developers would be interested to know more about is the Hyperledger endorsement principle.
  • Transactions must be endorsed by the peers in the network. They must confirm that the proposal is adequately formed, that it has not been used in the past, and that the signature and whoever made the submission agent is authorized to sign and submit the request.
  • Transactions are executed only when this process of validation was successful and confirmed by authorized peer signatures.  


The critical value of Hyperledger is its confidentiality, or the possibility to operate with shared transactions only with some participants in a network. In contrast to Ethereum, though, it lacks the option to build consensus as a proof-of-work and it doesn’t own its cryptocurrency.

While most blockchain developers are still facing the dilemma of which skills to develop (Go chaincode for the Hyperledger or Solidity development hacks for Ethereum), the Hyperledger projects are already being put in practice by several big industry players in finance, healthcare, retail, education and transport. Although it’s difficult to make a clear-cut decision of the long-term potential of the technology, it’s evident that it is replacing many of the processes that we currently use and challenging our “creature of habit” world of commerce.        

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