Which Blockchain to Choose in a Consortium?
Authors: Jonas Gross, Constantin Lichti, Martin Schäffner, Philipp Sandner
More and more companies consider distributed ledger technology (DLT) and start building blockchain-based applications and products. It is a common approach for industrial companies to form consortia with innovative blockchain developing experts in order to increase knowledge about DLT. A crucial question arises as soon as a consortium has been formed: Which blockchain platform should be used? Ethereum, Hyperledger Fabric, R3 Corda or maybe another blockchain platform? What are the advantages and disadvantages of each blockchain platform in the context of industrial use cases?
The Frankfurt School Blockchain Center and the Datarella GmbH are part of the “KOSMoS” consortium, a research project funded by the German Federal Ministry of Education and Research (BMBF). Together with partners from the industry, academia and software development, we create a blockchain-based solution allowing manufacturing companies to establish a DLT framework for machines in production processes. The aim is to execute dynamic leasing contracts, to provide transparent maintenance documentation, and to ensure high quality of the products. At the beginning of the project, we analyzed in detail, which blockchain framework to choose. In the following, we will provide insights into the process of selecting the most suitable blockchain technology for the research project.
First, we studied existing blockchain systems which are used frequently. We abstracted from novel, not mature, protocols, and focused on Ethereum, Hyperledger Fabric, R3 Corda and Quasar/Stellar.
Second, we defined criteria for the evaluation of the most suitable blockchain system, e.g.,
- Installation / user-friendliness: How easy is the installation process? How well is it documented?
- Efficiency / performance: What are maximum block sizes? Can several transactions be conducted simultaneously?
- Cost efficiency: How large are costs for transactions and maintenance?
- Release capability / up-to-dateness: How mature is the technology? How large is the developer community?
- Security / safety: How secure is the blockchain system?
- Administration: How modular is the respective framework? Is interoperability guaranteed?
Third, we evaluated the pre-selected blockchain platforms according to these criteria (see Figure 1). We found that Ethereum and Hyperledger Fabric performed best. These technologies were exceptionally user-friendly, relatively easy to install, and can rely on a huge developer base. Further, a solid performance, high-cost efficiency, and safety are provided. Eventually, we had to choose one of the two blockchain technologies — Ethereum and Hyperledger Fabric — based on the specific needs of our project.
The winner was….
And we decided to use Hyperledger Fabric. We selected the Hyperledger Fabric protocol for the KOSMoS project for the following main reason: Hyperledger Fabric is very suitable for consortial blockchains as it is most appropriate for multi-client capability. It describes that multiple participants can operate on the blockchain system while transactions are only visible to relevant stakeholders. Therefore, Hyperledger Fabric incorporates channel functionalities. As we intend to use only one single blockchain for different use cases and, therefore, with different and independent parties, we needed to make sure that privacy concerns of the industrial partners are being taken care of. In Hyperledger Fabric, it is possible to channel connections between organizations in such a way that the transactions are hidden from other participants on the blockchain. This possibility protects data from unintended sharing with others.
Additionally, Hyperledger comes with a modular system architecture that allows developers to add other modules, like an identity module, easily into the system. Another advantage of Hyperledger is that the rights of each participant can be easily managed with so-called “Membership Service Providers” (MSP). Here, the certificate authority can create, sign, deposit and revoke X.509 certificates, which grant the individual participants certain rights in the network. Further, the MSP can be connected to the organization’s identity management system.
Last but not least, Hyperledger is very scalable and well-performing. Any consensus mechanism can be implemented that allows multiple participants to send transactions that will be automatically ordered by the orderer node. This architecture increases throughput and performance of the system.
As next steps, stakeholders’ interests, rights and responsibilities will be defined within the system. Based on this information, the Hyperledger Fabric network will be designed to create a trustful and decentralized ecosystem. A governance model will be set up, which every participant has to confirm prior to its implementation. These steps define the fundamentals of the system. Afterwards, the system has to be built step by step. Questions have to be addressed, e.g.: How do we ensure that the data will be transmitted securely? How will users receive and manage their certificates? Additionally, smart contracts will be defined that manage the incoming data and manage how they are being processed.
KOSMoS is a research project funded by the German Federal Ministry of Education and Research (BMBF) under the funding code 02P17D020. More information about the project can be found on the website.
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Jonas Gross is a research assistant and project manager and research assistant at the Frankfurt School Blockchain Center (FSBC) and also works for the KOSMoS research project. His fields of interests are primarily crypto currencies. Besides, in the context of his Ph.D., he analyzes the impact of blockchain technology on the monetary policy of worldwide central banks. He mainly studies innovations as central bank digital currencies (CBDC) and central bank crypto currencies (CBCC). You can contact him via mail (email@example.com), LinkedIn (https://www.linkedin.com/in/jonasgross94/) and via Twitter (@Jonas__Gross).
Constantin Lichti is a research assistant and project manager at the Frankfurt School Blockchain Center (FSBC), and also works for the KOSMoS research project. Furthermore, he is responsible for project proposals and grants as well as studies published at the FSBC. As a doctoral candidate his research interests cover blockchain themes in the light of digital transformation processes, especially the adoption of blockchain technology as well as the emergence of the global token market and digital business models based on blockchain technology. He graduated from the Technical University of Munich with a master’s degree in industrial engineering and management. You can contact him via mail (firstname.lastname@example.org) and LinkedIn (https://www.linkedin.com/in/constantin-lichti-5644b9109/).
Martin Schäffner is a Blockchain Architect at Datarella GmbH, a Munich-based blockchain solution provider that is also a participant in the KOSMoS project. His fields of interest are designing, managing and creating enterprise blockchain solutions. Martin did his Master’s at the Technical University of Munich in information systems and wrote his Master’s Thesis about analyzing and evaluating the Self-Sovereign Identity ecosystem. You can contact him via mail (email@example.com) or via LinkedIn (https://www.linkedin.com/in/martinschaeffner/).
Prof. Dr. Philipp Sandner is head of the Frankfurt School Blockchain Center (FSBC) at the Frankfurt School of Finance & Management. In 2018, he was ranked as one of the “Top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belongs to the “Top 40 under 40” — a ranking by the German business magazine Capital. The expertise of Prof. Sandner, in particular, includes blockchain technology, crypto assets, distributed ledger technology (DLT), Euro-on-Ledger, security tokens (STOs), digital transformation and entrepreneurship. You can contact him via mail (firstname.lastname@example.org) via LinkedIn. (https://www.linkedin.com/in/philippsandner/) or follow him on Twitter (@philippsandner).