The Most Popular Enterprise Blockchain Protocols & How They Work

Blockchain technology, since its creation with Bitcoin, has demonstrated tremendous potential to transform numerous industries. Though public blockchains such as Bitcoin and Ethereum were initially in the limelight, businesses realized that they needed solutions that catered to their particular needs, including privacy, scalability, and control. This created a demand for solutions that are meant to enable business applications of this revolutionary technology. In this article, we will discuss some of the most widely used protocols and dive into their functionalities.

Understanding Enterprise Blockchain Protocols

Before diving into specific protocols, it's crucial to understand what distinguishes enterprise blockchain protocols from public blockchains. These protocols are typically permissioned, meaning that access to the network is restricted to authorized participants. This enables businesses to maintain control over who can view and interact with the data on the blockchain. These protocols also offer enhanced privacy features, higher transaction throughput, and customizable consensus mechanisms, making them suitable for various enterprise use cases.

Popular Enterprise Blockchain Protocols

Here are some of the most prominent blockchain protocols:

1. Hyperledger Fabric

Released by the Linux Foundation, Hyperledger Fabric is a modular, open-source platform used for creating permissioned blockchains. It aims to offer corporations the flexibility of building tailored blockchain solutions that match their particular demands.

Key Features:

• Permissioned Network: Only authorized participants can access the network.

• Modular Architecture: Allows for plug-and-play components, such as consensus mechanisms and membership services.

• Chaincode (Smart Contracts): Enables the execution of business logic on the blockchain.

• Channels: Provides data partitioning for enhanced privacy and confidentiality.

• Pluggable Consensus: Supports various consensus algorithms, including PBFT and Raft.

How it Works: 

Hyperledger Fabric operates through a network of nodes, including peers, orderers, and certificate authorities. Peers execute transactions and maintain the ledger, orderers ensure the ordering of transactions, and certificate authorities manage the identities of network participants. Transactions are submitted by applications, endorsed by peers, ordered into blocks, and committed to the ledger.

2. R3 Corda

Developed by the R3 consortium, Corda is an open-source, permissioned distributed ledger technology (DLT) platform designed specifically for businesses. It focuses on facilitating direct, private transactions between parties, particularly in the financial services industry.

Key Features:

• Permissioned Network: Participation is restricted to authorized entities.

• Point-to-Point Transactions: Data is shared only between the parties involved in a transaction, ensuring privacy.

• Smart Contracts (CorDapps): Automate agreements and business logic.

• Notary Service: Validates the uniqueness of transactions without seeing their content.

• Flow Framework: Enables developers to define complex, multi-party workflows.

How it Works: 

Corda operates on the principle of shared ledgers, where each participant maintains their own version of the ledger, which is synchronized with relevant counterparties. Transactions are initiated by participants, validated by notaries, and recorded in the ledgers of the involved parties. Corda's architecture emphasizes privacy by ensuring that data is only shared on a need-to-know basis.

3. Quorum

Developed by JPMorgan Chase, Quorum is an open-source, permissioned blockchain platform derived from Ethereum. It's designed for applications requiring high throughput and privacy, particularly in the financial industry.

Key Features:

• Permissioned Network: Access is controlled, making it suitable for enterprise use cases.

• Privacy: Uses private transactions to restrict data visibility to authorized parties.

• Smart Contracts: Supports Ethereum Virtual Machine (EVM) compatible smart contracts.

• Consensus Mechanisms: Offers various consensus algorithms, including Raft and Istanbul Byzantine Fault Tolerance (IBFT).

• High Performance: Optimized for high transaction throughput.

How it Works: 

Quorum retains many of Ethereum's core features but incorporates modifications to address enterprise requirements. Transactions can be either public (shared with all network participants) or private (shared only with specific parties). Quorum employs consensus mechanisms that are more suitable for permissioned networks than Ethereum's original Proof-of-Work.

4. Hedera Hashgraph:

Hedera Hashgraph is a distributed ledger technology that employs a unique consensus algorithm called Hashgraph, which offers high throughput, low latency, and strong security. While not strictly a blockchain, it is often considered an alternative due to its similar functionalities.

Key Features:

• Permissioned and Public Networks: Can operate as both permissioned and public ledgers.

• Hashgraph Consensus: Achieves consensus through a gossip protocol and virtual voting.

• High Throughput: Capable of processing thousands of transactions per second.

• Low Latency: Transactions are confirmed within seconds.

• Security: Provides strong security guarantees with asynchronous Byzantine Fault Tolerance (aBFT).

How it Works: 

Hedera Hashgraph doesn't use traditional blocks and chains. Instead, it employs a directed acyclic graph (DAG) data structure where transactions are gossiped among nodes. Each node receives information about past transactions and uses this information to calculate consensus. This process enables high throughput and low latency.

Choosing the Right Protocol

Selecting the appropriate protocol depends on various factors, including:

• Privacy Requirements: How sensitive is the data being stored on the blockchain?

• Scalability Needs: How many transactions per second does the application need to handle?

• Control and Governance: How much control does the enterprise need over the network and its participants?

• Interoperability: Does the blockchain need to interact with other systems or blockchains?

• Use Case: What specific business problem is the blockchain intended to solve?

Conclusion

Enterprise blockchain protocols are empowering businesses to transform their operations, enhance efficiency, and create new opportunities. By providing secure, transparent, and auditable platforms for data sharing and transaction processing, these protocols are finding applications in various industries, including supply chain management, finance, healthcare, and more. As the technology continues to mature and evolve, we can expect even wider adoption of these protocols in the years to come, driving innovation and reshaping the future of business.