What is the Underlying Technology Behind Blockchain?

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Businesses that hear about blockchain might be wondering just how they can utilize this new technology to their benefit. There isn’t a one-size-fits-all solution for companies looking to implement blockchain. Businesses interested in blockchain need to understand both the underlying technology behind blockchain, and how vendors are currently utilizing it.

Those who have even a cursory knowledge follow blockchain and cryptocurrency likely know the name Ethereum. Behind bitcoin, it is one of the most valuable cryptocurrencies in 2018. Ethereum is also the name of the blockchain technology that powers that currency. It is an open-source distributed computing platform that can power blockchain applications of all kinds. In particular, its value is in executing smart contracts. Companies can help manage any kind of transaction between two parties using an Ethereum-based system to ensure the speed, safety, and reliability of the transactions, with the ledger verified by all parties.

Much in the way blockchain is decentralized, many vendors developing blockchain are not getting tied to one particular technology. The Linux Foundation’s Hyperledger is largely based on IBM’s Fabric code base, but also works with other blockchain platforms and technologies. Fabric doesn’t have to use a cryptocurrency or mining to help assure transactions, unlike Ethereum. It is an entirely permissioned network, with the ability to have public or confidential transactions through Practical Byzantine Fault Tolerance consensus. However, the Hyperledger consortium does support coin-based blockchain as well.

The Linux ecosystem is a great parallel for blockchain. Companies are building out enterprise technologies based on the underlying open-source technology. Appropriately, Red Hat, known for their eponymous Linux distribution, is working on a similar approach for blockchain. They don’t plan on inventing the underlying technology for blockchain. Instead, they are providing enterprises with blockchain services and applications that run on open-source, distributed ledger deployments. While Red Hat is working with Hyperledger and Ethereum at the moment, they are also open to other blockchain solutions such as IBM’s Fabric and Intel’s Sawtooth.

As PJ Jakovlevic’s Demystifying Blockchain whitepaper points out, BlockApps is working with Red Hat in particular to build open-source blockchain tools for the enterprise. STRATO is available on the Red Hat OpenShift Container Platform, allowing companies to deploy private blockchains. Companies can deploy STRATO on-premise, and scale to production level to Microsoft Azure and AWS, with a single dashboard for managing smart contracts. A company’s developers just have to implement what they want their smart contracts to do on the blockchain.

Oracle is another major name developing cloud-based blockchain products. Oracle Blockchain Cloud Service is a platform that allows enterprises to build and maintain their own secure distributed ledger across not just their network, but the partners that they work with. This will help create a system for verified and secure business-to-business transactions. Oracle’s known track record in the enterprise with cloud-based services might make it a major player in the blockchain industry going forward.

Parties interested in blockchain do need to know that there is nothing resembling a standard yet. Blockchain will resemble Linux in many ways, where implementations will differ from vendor to vendor. But much like how Linux now powers everything from phones to ovens, it’s possible that a Hyperledger-based technology, or Ethereum, or some other technology yet to reach prominence, will become the industry standard. The vendors that adapt quickest to the blockchain market will be the ones that survive and thrive going forward.

Similarly, business owners and operators need to monitor vendors and their offerings. Blockchain might not be a fit for every business, but there is the potential for a vendor to find a new use for the technology that will be an ideal fit.

Take 30 minutes on March 22nd to learn more. Register today for our webinar, How Can Your Business Use Blockchain.

 

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This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

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