How to decide which blockchain platform to use.

One of the most important decisions to consider when choosing a blockchain strategy is deciding which blockchain platform to use.  There are strengths and weaknesses associated with the different platforms. Therefore, I decided to put together a roadmap to help you better understand the different options available.

This article assumes you know the basic blockchain terminologies – there is already so much information about blockchain, I’m not going to repeat them here – but if you would like to know more – I suggest you read these two great posts on Medium before you read the rest of this article.

 https://medium.com/@cryptoeconomics/the-blockchain-economy-a-beginners-guide-to-institutional-cryptoeconomics-64bf2f2beec4  - loved the simplified analogy the writer uses.

https://medium.com/loom-network/understanding-blockchain-fundamentals-part-1-byzantine-fault-tolerance-245f46fe8419- Understanding the Byzantine model is central to how blockchain functions – this is a great intro to it.

Hopefully, by now you must have acquainted yourself with the basics and have now decided you want to carry out a blockchain project - but not all blockchain platforms are equal. 

Let’s start with defining the three types of blockchains available.

Public Blockchain

First, is the public blockchain.  In public blockchain, there are no access restrictions and is completely transparent. Anyone on the public blockchain can read or write to it – provided they show “proof of work” for the same.  “Proof of work” is a process where each node (computer) on the network must solve a complex cryptographic problem.  A public blockchain is an example of a fully decentralised blockchain system.  Bitcoin and Ethereum are popular examples. 

If you wish to know more about decentralisation, check out Vitalik Buterin’s post - https://medium.com/@VitalikButerin/the-meaning-of-decentralization-a0c92b76a274 It’s a great introduction to the meaning of decentralisation.

Public blockchains may require a substantial amount of computational power to maintain a distributed ledger at scale. This is one of its potential drawbacks.  Another disadvantage of this platform is its openness. Thus, it has limited security and has little to no privacy for transactions. These are all important factors to consider when deciding whether to use it or not.

Private Blockchain

Next up is a private blockchain.  To join a Private blockchain, a node must be invited and validated by either the network originator or by a set of rules that have been put in place.  Access is restricted to this platform.  The ability to write information and validate transactions is limited to one organisation and read permissions can be public or restricted. Private blockchains are best for applications that concerns a single company. 

Private blockchains are good at scalability and compliance with data privacy rules and other regulatory issues. For example, they are an excellent solution for heavily regulated industries that have to comply with AML – anti-money laundering or KYC – know your customer regulations.  

The downside of a private blockchain, however, is because they can take advantage of the blockchain technology by setting up groups and users who can verify transactions internally, this puts the company at risk of security breaches just like in a centralised system.  This is harder to do in a public blockchain where there are numerous parties involved therefor making it harder to penetrate.

Permission Blockchain  

A permission blockchain (aka consortium) is a mix of both the public and private blockchain platforms.  Instead of a single organisation controlling it, there are usually a number of companies that will operate different nodes on the network.  Execution of the consensus protocol is often limited to a select set of trusted nodes and users, also, reading rights will be restricted as the administrators see fit. 

When considering a permission network, you should think about if your blockchain use case needs to comply with data protection regulations.  Many use cases — in the financial sector and healthcare industry, in particular — are subject to data protection laws that require knowing who the members of the network are and who is accessing specific data.

The recent initiative of several large insurance companies led by Swiss Re and Allianz is an example of this.  They launched the Blockchain Insurance Industry Initiative B3i with the goal of using distributed ledger technologies to better serve their clients by offering faster, more convenient and secure services.

Supply chain management is another ideal use case for a permission blockchain. In supply chain use cases, you would only want certain companies participating. Each participant involved in the supply chain would have permissions to execute transactions, and those transactions would allow everyone else in the blockchain to track where in the supply chain a particular item is. 

So how do you decide which type of platform to use?  Choosing the right platform is an important and complex decision.  It will have a long-term impact, regardless of the chosen platform. Although, there are only a few tools available to help you understand which platform will work best.  

The very first question you need to answer is – is blockchain right for your project?  The graph illustrated below will help you try and figure out the ideal starting point for selecting the best way forward.

Source: www.verypossible.com

Once you have determined the type of blockchain needed, you can better identify the best blockchain platform to use. The following is an analysis of the leading blockchain platforms.  

Ethereum

Ethereum is a decentralised blockchain platform that runs on smart contracts: applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference.  These apps run on a custom built blockchain.

Advantages:

·     It has a Turing complete language. (Solidity)

·     Has excellent fault tolerance with thousands + nodes running.  If some nodes crash, others will continue working.

·     Corporate companies have begun backing Ethereum, which is providing credibility and stability.

·     Ability to carry out smart contracts.

Disadvantages:

·     Transaction speeds are not very quick.

·     Innovation is happening quickly. This is causing some developers not to keep up.

Consensus mechanism: Proof of work + proof of stake (coming soon) 

What it’s best for:  Creating public, decentralised apps with smart contracts 

Type of blockchain: Public

Hyperledger – Fabric

Hyperledger Fabric is an enterprise blockchain framework hosted by the Linux Foundation intended as a foundation for developing blockchain applications or solutions with a modular architecture. Hyperledger Fabric allows components such as consensus operate on a plug-and-play basis.  Hyperledger Fabric is a framework for permission networks, where all participants have known identities.  

Advantages:

·     Large enterprise backing.  Many large-scale projects already underway.

·     Ability to offer private channels to certain parties.

·     Offers smart contracts via “chain code”.

Disadvantages:

·     Heavily influenced by large corporate companies

·     There is no public chain.

·     Has no built-in cryptocurrency. Consensus can be manipulated easier than on a public chain

Consensus mechanism: Apache Kafka (Permissioned voting based. Leader does ordering. Only in- sync replicas can be voted as a leader.) 

What it’s best for: Developing enterprise- ready blockchain apps using smart contracts with privacy and permissions support. 

Type of blockchain: Private or permissioned

Hyperledger Sawtooth

Sawtooth is a modular platform for building, deploying and running distributed ledgers and is designed for use at scale. It has many features that include parallel execution, multi-language support, supply chain management, permissioning; and on-chain governance.  Hyperledger Sawtooth includes a novel consensus algorithm, Proof of Elapsed Time (PoET), which targets large distributed validator populations with minimal resource consumption. Sawtooth is known for its integration capabilities with hardware security solutions.  

Central to Sawtooth's PoET consensus mechanism is a streamlined ability to integrate with a hardware security solutions called "trusted execution environments," among which is Intel's newly launched scalable Xeon processor.  It is important to note that there is no dependence on Intel hardware and it's a hardware-agnostic platform.

Real world examples included – Seafood - “supply chain traceability”, Bond - “Asset Settlement”, Marketplace – “Digital Asset Exchange.”

Advantages:

·     On-chain governance – Utilizes smart contracts to vote on blockchain configuration settings.

·     Advanced transaction execution engine – Process transactions in parallel to accelerate block creation and validation.

·     Support for Ethereum – Run smart contracts and integrate with Ethereum tooling.

·     Dynamic Consensus – Upgrade or swap the blockchain consensus protocol on the fly.

·     Can run EVM "Ethereum virtual machine" 

·     Huge scalability options

Disadvantages:

·     A relatively new platform.

Consensus mechanism: Proof ofElapsed Time (PoET)

What it’s best for:  Building scalable, broad networks of hundreds or thousands of nodes. 

Type of blockchain:Private or permissioned

Hyperledger – Iroha  

Hyperledger Iroha was built as a mobile-first blockchain.

The Iroha consensus algorithm was designed specifically to enable blockchain-based solutions on mobile devices that have lower processing power. The platform also supports the creation of some crypto assets.

Contributed by Tokyo-based fintechstart-up Soramitsu, with support from Hitachi, NTT Data and Colu.

Advantages: 

·     First mobile blockchain

·     A new, chain-based Byzantine Fault Tolerant consensus algorithm, called Sumeragi.

Disadvantage:

·     Not designed for tradition blockchain use cases.

Consensus mechanism: Proof- of-stake Tender mint consensus engine 

What it’s best for: Operating Ethereum smart contracts in a permission blockchain environment. 

Type of blockchain:Private or permissioned

Quorum 

Quorum is a permission implementation of Ethereum. It was created and open sourced by JPMorgan.  Quorum is a fork of the Ethereum public blockchain that achieves data privacy by allowing data visibility on a “need-to-know” basis. 

Advantages:

·     Transaction-level privacy: Quorum is the first distributed ledger platform to feature zero-knowledge security layer (ZSL). This feature aims to use shielded transactions to protect users’ privacy. 

Disadvantages:

·     Quorum’s channel-based approach to privacy presents challenges for privacy and scalability as use cases become more complex.

·     Quorum doesn’t require a built-in cryptocurrency because consensus is not reached via mining. It’s not possible to develop a native currency or a digital token with Quorum.

Consensus mechanism: Quorum Chain Consensus

What it’s best for: Shuffling derivatives and payments

Type of blockchain: Private or permissioned

Wrapping up

I have highlighted some of the major blockchain platforms. I hope this helps you in getting a better idea of some of the different types of blockchain platforms out there.  There is no one size fits all in the blockchain ecosystem, and the industry is constantly and rapidly evolving.  If you have any questions or want to brainstorm blockchain ideas, then feel free to give me a shout. Best of luck on your journey, Todd.