Hyperledger and the Challenges of the Digital Supply Chain

Hyperledger by itself is an umbrella project that is hosted by the Linux Foundation and is coordinating various projects for creating a common enterprise-grade blockchain platform. For example, there are several frameworks which implement all necessary components in order to operate a fully-fledged blockchain network. One such blockchain framework is Fabric, which can be used for setting up a digital infrastructure for smart contracts. The framework has a flexible design which is highly customizable and allows for the deployment of a wide range of smart contract applications. In previous blog posts [1] [2] I have outlined how we have used Fabric to enable confidential smart contracts. However, Fabric is not the only project providing these components and there are alternatives such as Besu, Iroha, and Sawtooth. Other projects can then provide additional functionalities by extending the underlying frameworks through multiple documented interfaces.

Smart contract applications require collaboration between various parties, such as companies, organizations and individuals, which must come together in order to form a blockchain network. One of the challenges that is being addressed – in particular by Fabric – is the mutual distrust among participating parties. Unlike well-established public blockchain networks like Bitcoin or Ethereum, Fabric regulates access to private blockchain networks through a membership service provider.

Without authorization of a service provider, it is not possible to join or participate in a private blockchain network. Besides the service provider model, there are additional trust models that can be adapted to the use case of each individual blockchain network. This makes private blockchain networks ideal for companies that are interested in forming a digital supply chain backed by blockchain technology powered by Hyperledger.

Currently, the industry is facing many challenges in adopting blockchain technology. Blockchain technology uses a vastly different approach and model than current systems in use by the industries. Not only is information technology infrastructure required, but so are software engineers and developers to maintain and update the infrastructure and applications for the blockchain system. Companies see themselves confronted with upfront costs for hiring and educating engineers and developers in order to transition to a blockchain system. Furthermore, as the technology is relatively young, it is rather difficult to find experienced people that are familiar with the technology and programming languages used by blockchain platforms. It is quite common that engineers and developers are learning some of the required know-how on the job. Once a party has set up its blockchain platform, there are many new challenges, such as how to expand and grow the network or how to provide interoperability with other parties. These challenges can be avoided and are generally solved by adhering to common standards and platforms as the ones being provided by Hyperledger. Parties that deviate from such common approaches can end up in trouble and potentially prohibit themselves from participating in other blockchain networks.

Consider, for example, blockchain technology being used in the fight against the COVID-19 global pandemic. More specifically, this technology could have been used for storing and validating COVID certificates. Imagine if each Swiss canton was setting up its own COVID system and all cantons agreed nationwide on a common interface for exchanging information. By using blockchain technologies, each canton’s systems could be joined together to form a national blockchain network. The blockchain could then store certificates publicly, for which anonymized input parameters such as date of issue, issuer, and vaccine could be provided. This would allow the application, but also individuals alike, to transparently validate certificates. Furthermore, it would be possible to identify any fraudulent cases because of either invalid or suspicious input parameters, as they occurred on several occasions with the currently used system.

However, the realization of such systems is facing the same challenges as the ones found in the industry sector. There are also privacy related issues regarding any publicly available personal data. As a consequence, it might have taken more time and would have cost more to set up COVID certificates based on blockchain technology than the digitally signed data encoded in the QR codes that are currently in use. Even if such a blockchain system existed, it would also have to be internationally compatible with other certificate systems which might not use blockchain technology. The opportunity of using a blockchain system would have allowed the integration of the entire supply chain for maximum transparency and security. This would have enabled individuals to trace back the vaccine along the supply chain to its origin. With the help of IoT, it would even have been possible to record transport conditions for vaccines sensitive to temperature and link them to the certificate for verification. Widespread use of blockchain technology has yet to be established in the industry.

Many companies as well as individuals are considering the implementation of blockchain technology into their services and web pages in order to make them ready for Web3. As a consequence, they are facing many of the challenges outlined in the previous paragraphs. Although smart contracts have been around for almost a decade, the hurdles for integrating blockchain technology into services and web pages remain considerable. Similarly, web pages used to be difficult to establish, but nowadays there exists a variety of tools and frameworks, such that each and every one can create appealing, modern and professional web presences. It is to be expected that in the near future similar tools and frameworks will provide seamless integration of blockchain technology without the need for experts. Not only the usability, but also the performance – in particular the number of transactions per second – are still a bit below what is required for a widespread adoption of blockchain technology, but those parameters could be greatly improved over the next years.

Suggested citation: Göttel Christian, Hyperledger and the Challenges of the Digital Supply Chain, Blog of the LexTech Institute, 13 September 2022