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What is blockchain and how does it work?

Jonathan Hassell | April 15, 2016
Bitcoin exploded on to the world’s stage in 2012 as a currency backed by everyone and controlled by no one. But what exactly makes it work from a technology standpoint?

Impediments to blockchain

The biggest problem with blockchain technology now is that it is hard to apply, mainly because, as is typical with open source projects, there are numerous projects each with their own teams and ideals. Marrying all of the functionality into a practical application is difficult. “The only thing that gives me pause about Blockchain is the community that builds the code,” says Matt Reynolds, blockchain application development expert. “Bitcoin is open source, but the team that manages it do not behave in the way you’d ideally like FOSS maintainers to maintain. They behave more like an ‘answerable to no one’ proprietary software team, and that’s not good for anyone using Bitcoin’s Blockchain implementation in their own projects.”

What is Hyperledger?

Hyperledger is a project that tries to unify all of the different open source blockchain approaches that exist currently. The goal? According to the official Hyperledger website, “the project is building a general-purpose blockchain framework that can be used across industry sectors, from financial services to retail to manufacturing and more.”

What is significant about this project compared to the various and sundry other open source projects that litter the Internet is the industry participation and big names behind this: according to the project, founding members of the initiative include ABN AMRO, Accenture, ANZ Bank, Blockchain, BNY Mellon, Calastone, Cisco, CLS, CME Group, ConsenSys, Credits, The Depository Trust & Clearing Corporation (DTCC), Deutsche Börse Group, Digital Asset Holdings, Fujitsu Limited, Guardtime, Hitachi, IBM, Intel, IntellectEU, J.P. Morgan, NEC, NTT DATA, R3, Red Hat, State Street, SWIFT, Symbiont, VMware and Wells Fargo.

Hyperledger’s current goals are to combine three projects into practical blockchain applications:

  • Rippled, a public distributed ledger written in C++ that handles cross-currency payments using order books
  • IBM’s Open Blockchain, a low level fabric that implements smart contracts, digital assets, record repositories, consensus oriented networks, and cryptographic security
  • Digital Asset’s Hyperledger, which is a ready to deploy blockchain server with a client API currently intended for use by financial services enterprises. It works by using an addition-only log of transactions that are designed to be replicated across multiple separate organizations all without a nexus of control. (The parent company, Digital Asset Holdings, lent the Hyperledger trademark name to the open source project as part of its contribution.)

Technology industry giant IBM agrees: it is contributing tens of thousands of lines of code to the Hyperledger project while also being clear that it believes that open technology is the best way to create a truly applicable implementation of blockchain to today’s business and enterprise market. In fact, IBM sees blockchain and ledger technology as making the Internet more aware of commerce.

 

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