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Hyperledger Fabric: Benefits and Use Cases

Soumalya Bhattacharyya
Oct 27, 2022

The modular blockchain architecture and de facto industry standard for business blockchain platforms are Hyperledger Fabric, an open-source project from the Linux Foundation.

The open, modular architecture leverages plug-and-play components to support a variety of use cases and is designed as a platform for creating enterprise-grade applications and business solutions.

Hyperledger Fabric offers a distinctive method of consensus that enables performance at scale while simultaneously upholding the data privacy requirements of businesses. It does this with the help of more than 120,000 participating organizations and more than 15,000 engineer contributors.

An open, tested, enterprise-grade distributed ledger platform is Hyperledger Fabric. It features sophisticated privacy controls so that only the information you want to be shared is shared with the "permitted" (known) network users.

The business operations you wish to automate are documented in intelligent contracts with self-executing clauses between the parties that are written in lines of code. The distributed, decentralized blockchain network comprises the code and agreements included therein. Because transactions are retractable and irreversible, organizations may trust one another. Due to the ability to quickly make better judgments, organizations may save time, money, and risk.

Also Read | Everything about Distributed Ledger Technology (DLT)

What Is Hyperledger Fabric?

Hyperledger Fabric is a modular blockchain architecture that can be used to build blockchain-based goods, services, and applications that are intended for usage by private businesses with the help of plug-and-play components.

The Linux Foundation introduced Hyperledger, an open-source distributed ledger system for businesses, in December 2016. IBM created Fabric, a highly adaptable decentralized ledger technology (DLT) platform, for usage in industrial enterprises.

Businesses can separate information (such as pricing) since Hyperledger Fabric is private and needs authorization, and transactions can be completed more quickly because there are fewer nodes in the network.

To achieve measurable business benefits, innovators across a wide variety of sectors—finance, banking, healthcare, IoT, supply chain, manufacturing, and technology—are developing open, standardized, enterprise-grade blockchain frameworks and code bases leveraging Hyperledger Fabric.

In January 2020, Fabric 2.0 was launched. This version's key advantages are simplified data sharing, upgraded smart contract technology, and speedier transactions. The Linux Foundation is presently hosting the collaborative cross-industry project known as Hyperledger Fabric, which was first developed by Digital Asset and IBM. The fabric was the first Hyperledger project to reach the "active" level in March 2017 after leaving the "incubation" stage.

If a producer wishes to send chocolates to a certain store or market of retailers (all US shops, for example) for a certain price but does not want to disclose that pricing in other markets, what would happen?

If a simple implementation of blockchain technology is utilized to enable this transaction, the private pricing may be disclosed to all interested parties as the transfer of the commodity may include other parties, such as customs, a shipping firm, and a financing bank.

By keeping private transactions secret on the network, Hyperledger Fabric solves this problem by ensuring that only those parties who require the information are aware of it. On the blockchain, data partitioning enables some data points to be available only to the people that require them.

How does Hyperledger Fabric Work?

A Hyperledger Fabric network is made up of distinct businesses (or members) who communicate with one another over the web. An organization could, for instance, be a shipping partner in a supply chain network or a bank in a network of financial institutions. Each organization has a Fabric certificate authority and one or more peer nodes from the standpoint of a Fabric component. Each organization in a Fabric network uses a common ordering service, which aids in the network's transaction processing.

A root certificate unique to that organization in a network serves as the definition of that organization. These certificates are obtained from this root certificate, guaranteeing that other organizations in the network may connect a user to their organization. Users and other components (like peer nodes - see below) in that organization are likewise recognized by certificates. The rights for each entity on the network, such as read-only vs full access on a channel, are also specified in these certificates.

The Fabric certificate authority (CA) maintains a root certificate for an organization. The Fabric CA also manages other related tasks and gives certificates to users inside an organization. A Hardware Security Module (HSM) is used for root certificate security in an enterprise-grade Fabric CA, which uses a range of components and may be implemented in a number of different ways.

In order to do tasks on its behalf, an organization may additionally designate one or more peer nodes as components. A peer node, also known as chain code in Fabric, runs smart contract code, keeps a local copy of the ledger for access, and authorizes transactions submitted on the network. In order to read the ledger, contribute additional chain code to the network, or propose a new transaction, fabric clients often communicate with peer nodes. Usually, a peer node operates on a separate computer, such as an Amazon EC2 instance.

A Fabric network also features a common ordering mechanism that is available to all users. The ordering service ensures that newly added transactions to the network are appropriately endorsed and sorted in new blocks. A fresh block of transactions is then broadcast to peer nodes within each organization by the ordering service. With this new block, peer nodes update their local copies of the ledger.

Traditional blockchain networks are unable to support private transactions and secret contracts, which are crucial for businesses. In order to provide industrial blockchain solutions, Hyperledger Fabric was created as a modular, scalable, and secure foundation. The blockchain's open-source engine, Hyperledger Fabric, takes care of the key components for assessing and utilizing blockchain for commercial use cases.

The verifiable identity of a participant is a fundamental requirement within private industrial networks. All network participants must have established identities, which Hyperledger Fabric supports.

The maintenance of information about the various participants and their respective access to various data points is required by data protection regulations in many business sectors, including healthcare and finance. Such membership based on permissions is supported by Fabric.

Modular Architecture of Hyperledger Fabric:

The workflow for processing transactions is divided into three stages by Hyperledger Fabric's modular architecture: ordering transactions, validating and committing transactions, and validating smart contracts (also known as chain code), which make up the distributed logic processing and agreement of the system.

This segmentation has several advantages:

Fewer layers of verification and trust, keeping the network and processing uncluttered
Larger network capacity
Improved performance as a whole

Furthermore, the ability of Hyperledger Fabric to facilitate plug-and-play of multiple components enables the simple reuse of current functionality and the quick integration of numerous modules. For instance, an enterprise-level network needs to just plug and reuse an existing module if a function that validates the participant's identification already exists rather than having to create the same function from scratch.

In a nutshell, the endorsement peer receives the transaction proposal in accordance with the preset endorsement policy about the necessary number of endorsers. A batch or block of transactions is handed to the committer after receiving enough endorsements from the endorsers. The endorsement policy was adhered to, and committers confirm that no transactions contradict one another. The transactions are committed to the ledger when both checks have been written.

The scalability and speed of the network are improved since only confirming instructions, such as signatures and read/write sets, are sent over it. The transaction is only accessible to endorsers and committers, and security is increased by limiting access to important data points to a smaller number of participants.

Hyperledger Fabric Transaction Flow:

When a client application sends a transaction proposal to peers in each organization for approval, the transaction flow starts.
The peers confirm the identity and legitimacy of the submitting client to submit the transaction. After that, they simulate the results of the proposed transaction, and if they match what was anticipated, they provide the customer with an endorsement signature.
Once it has the required number of endorsements as specified in the endorsement policy, the client gathers recommendations from peers and transmits the transaction to the ordering service.
In order to comply with the endorsement policy, the ordering service lastly verifies that the transaction has the required number of endorsements.
The accepted transactions are then chronologically ordered, bundled into blocks, and sent to peer nodes within each organization.
The ordering service sends fresh blocks of transactions to peer nodes, who subsequently do a final validation on the transactions in that block.
As soon as this is finished, the ledger's state is changed and the new block is appended. The fresh deals have been committed.

Benefits of Hyperledger Fabric:

The benefits of Hyperledger Fabric are listed below:

Benefits of Hyperledger Fabric

Open Source

The Linux Foundation is the host of open-source Hyperledger Fabric technology, which is a blockchain framework. The developer community is vibrant and expanding.

Requires Permission

Fabric networks are permissioned, which means that the identities of every participant are known and verified. This advantage is especially beneficial in sectors like healthcare, supply chain management, finance, and insurance where data cannot be accessible to unidentified parties.

For instance, to protect consumer privacy, an insurance provider on a Hyperledger Fabric blockchain network can exchange customer claim data with authorized parties.

Governance and Access Control:

Fabric networks are made up of channels, which are private "subnets" of communication between two or more particular network members. Through these channels, network users can conduct confidential and private business. Every transaction on the blockchain network takes place on a channel, where each person involved must be verified and given permission to do business.

When members desire to restrict the accessibility of the data, as can be the case when rival businesses are using the same network, this adds an extra layer of access control and is extremely helpful. Access to certain transactions on a channel can be restricted to a subset of participants using Fabric's Private Data Collection feature set.

Performance:

With its fast transaction throughput enabled by its consensus process, Hyperledger Fabric is designed to serve enterprise-grade use cases. Fabric is a permissioned blockchain system, therefore Byzantine Fault Tolerance, which might result in slower performance while verifying transactions on the network, is not a problem that has to be solved.

Chaincode Functionality:

The system's business rules are defined using a container technology called chain code that is used to house smart contracts. Additionally, it is built to accommodate the complexity present across the entire economy and to support a variety of pluggable components. For some of the more specialized transactions, like changing asset ownership, this is helpful.

Industry Use Cases For Hyperledger Fabric:

Supply chain management

Global or local networks of manufacturers, merchants, and suppliers make up supply chains. By enhancing the transparency and traceability of transactions inside the fabric, Hyperledger Fabric networks can enhance supply chain transaction processes. Enterprises on a Fabric network can examine transaction history data if they have the authorization to access the ledger.

This fact promotes accountability and lowers the possibility of transaction fraud. The ledger may be updated with manufacturing and shipment information in real time. It might make it a lot quicker, easier, and more effective for us to keep track of the product's condition.

Trading and Asset Transfer:

Importers, exporters, banks, and brokers are only a few of the companies or participants needed for trading and asset transfer. They collaborate on projects. And a lot of paperwork is still being done in this industry even in this digital age. But they may do business and communicate with one another without using paper thanks to Hyperledger.

The document signed by a reputable authority can be added with the same level of confidence by the Hyperledger fabric. Additionally, the system's performance is improved by this. Another advantage of Hyperledger Fabric is that it enables the dematerialization of assets on the blockchain network. As a result, investors or traders will have immediate access to their financial instruments and be able to trade them whenever they want.

Insurance:

To prevent insurance fraud and fabricated claims, the insurance business invests billions of dollars. The insurance business can consult the transaction data that is kept in the ledger with the aid of Hyperledger fabric. Using the chain code, Hyperledger Fabric can also automate the payment process and speed up claim processing.

The handling of multi-party subrogation claims will also benefit from this procedure. where it is possible to automate the insurance company's request for reimbursement from the at-fault party. Using this private blockchain will make it simple to verify identification or the KYC procedure.

Also Read | Difference between Public and Private Blockchain

Conclusion

Hyperledger Fabric is positioned to revolutionize business networks by creating a highly scalable, permissioned, secure, and architecture driven by distributed ledger technology from the blockchain. The most widely utilized blockchain framework among large and medium-sized businesses is Hyperledger Fabric. But because of its adaptability and strength, it might be challenging to comprehend.

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