What is and how does the Hyperledger Fabric work?

It is a framework based on DLT that helps developers create tools in turn based on DLT.

Hyperledger Fabric: Blockchain or not?

Officially it is defined as a blockchain framework, but in reality, the use of the term blockchain in this case seems improper.

Hyperledger in fact is not a decentralized and permissionless blockchain, but despite being open source it is actually permissioned.

This is a project launched by the Linux Foundation in 2015, to which centralized giants such as IBM, Intel, and SAP have adhered.

Specifically, Hyperledger Fabric is one of the frameworks based on Hyperledger.

First of all, Hyperledger lacks a cryptocurrency. This means that it is not possible to remunerate the work of independent transaction validators, which are thus validated only by the managers of the distributed ledger.

Technically, the definition of DLT (Distributed Ledger Technology, or distributed ledger technology) is more appropriate for this ecosystem than the more restricted one of blockchain.

The blockchain is indeed a technology that allows the creation of distributed ledgers, but its true strength, the one unleashed by Bitcoin, is decentralization. Decentralization does not just mean open code and distributed ledgers, but above all permissionless and trustless transactions.

Hyperledger Fabric: all the details

Hyperledger Fabric is in fact a fully permissioned DLT infrastructure. Defining it as a “blockchain” would risk conveying the wrong concept that it is a totally decentralized and permissionless network.

It provides a modular architecture with a delineation of roles between the nodes in the infrastructure, and allows the execution of Smart Contracts called “chaincode”.

A Network based on Fabric includes “Peer nodes” that execute chaincode, approve transactions, and interface with applications, “Orderer nodes” that ensure the consistency of the blockchain and deliver approved transactions to the network peers, and Membership Service Providers (MSP) that manage the X.509 certificates used to authenticate the identity and roles of the members.

There is therefore no form of anonymity or pseudo-anonymity, as it is a network with privileged access and different roles within it.

The idea of IBM behind the Hyperledger Fabric project is to provide a framework to enable the development of tools based on DLT, but without directly offering user-facing services except for the SDK for Node.js, Java and Go.

Its strength lies mainly in not imposing on developers the use of ad hoc code for the creation of smart contracts, but allowing them to be written in well-known languages such as Go, JavaScript, or Java.

How it works

Hyperledger Fabric is an enterprise-grade distributed ledger platform.

It is therefore not directly aimed at end users, but at companies that want to use it to develop tools based on DLT in turn.

To allow companies to develop securely, and to manage roles within the developed tools, it provides advanced privacy controls so that only the data you wish to share is shared among the participants in the network. Therefore, there are authorized participants who can access certain data, and unauthorized participants who cannot access it.

This means that it is not even a public network.

IBM states that smart contracts on Hyperledger Fabric are used, for example, to document business processes that one wishes to automate, with conditions of autonomous execution between the parties executed by computer code. The distributed ledger serves to prevent anyone without permissions from modifying the smart contracts or transactions, which are thus traceable and irreversible.

The objective is to enable companies to implement decision-making processes more quickly, while reducing costs and risks.

IBM

Above Hyperledger Fabric, the IBM Blockchain Platform has been created.

Hyperledger Fabric is a free open source version, but it is also accompanied by other commercial distributions that include tools and support, such as the IBM Blockchain Platform.

In fact, IBM Blockchain Platform is IBM’s commercial distribution of Hyperledger Fabric.

So the Hyperledger project is open source, as is the Hyperledger Fabric framework. Instead, IBM’s commercial distribution, IBM Blockchain Platform, is proprietary to the company.

The uses

Despite Hyperledger Fabric having existed for almost 10 years now, that is since the project Ethereum was launched, there are still not many applications.

The fact of not having a cryptocurrency, and therefore being excluded from the financial market, has certainly not helped its spread.

Recently it has been discussed because it is involved with Nigeria’s project to develop its own State “blockchain,” called Nigerium.

Even in this case, it is actually not a decentralized blockchain at all, so much so that the success of this initiative is in doubt.

Indeed, Nigeria has long since created its own central bank digital currency (CBDC), called eNaira and based precisely on Hyperledger Fabric.

The problem is that, despite this project now being three years old, the use of eNaira has not yet taken off.

To tell the truth, however, it has been quite opposed by Nigerians, probably both because it is completely devoid of privacy, and because it is essentially the issuance of new currency that can generate inflation.

Not by chance in the last five years inflation in Nigeria has gone from 11% to 34%, with the largest increase starting from July 2022 and a real spike starting from August of last year.

Other uses of Hyperledger Fabric

In theory, there are also many other uses of Hyperledger Fabric. IBM, for example, had focused heavily on its use in the logistics field, which, however, seems to have never really taken off.

Recently, work has been done on some new projects related, for example, to the legal field, where it is important to ensure that the texts of the documents are not modified, or in the pharmaceutical field.

Often these are use cases specifically related to the traceability of processes and documents, given that the transactions recorded in a distributed ledger cannot be modified or deleted.

It is probably still just too early for the use of these technologies to spread, so much so that the same thing could be said for the true and proper decentralized blockchain.

For the latter, the difference is made by Bitcoin and other financial assets, which are carving out an increasingly important role within the new financial markets. DLT technologies that do not have a cryptocurrency are practically absent from the financial markets, and this does not accelerate their use at all.