Hyperledger Exec Director Waxes on Linux Foundation's Role in Driving Enterprise Blockchain Adoption

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What Are the Use Cases for Hyperledger in the Enterprise?

David Berlind: I'm David Berlind, editor-in-chief of Blockchain Journal. I'm here in Davos, Switzerland, at the World Economic Forum 2023, and we are scouring the city looking for great stories to tell and people to interview about Blockchain in the enterprise. And with me right now is Daniela Barbosa, who is the head of the Hyperledger Group or project at the Linux Foundation, and I can't even begin to start to describe it myself. So I'm going to turn it over to you and just please tell me what is Hyperledger and why is it at the Linux Foundation?

Daniela Barbosa: Right, so let's start with the Linux Foundation. Over the last 20 years, the Linux Foundation has been building open source communities from some of the most critical technologies in the world. From Kubernetes, for example, which is the cloud commuting to automotive grade Linux that is running a lot of the electronic versions, and obviously the Linux kernel itself. So for 20 years, we've been building these communities of open source communities with open governance of these code bases. And this is really important to the story of Hyperledger Foundation.

I serve across the Linux Foundation as general manager for blockchain and identity projects. So at the Linux Foundation, we are a home of multiple projects. Sometimes they compete with one another, but it's really about serving the industry's needs and today's worlds needs around technology. So we have blockchain projects like the Hyperledger Foundation, which I'll talk about in a bit, as well as projects that are dealing with standards and governance around trust over IP from a digital identity perspective, and even live operating networks like Open IDL, which is an insurance open data link project. So it's really comprehensive in where the market needs. Just this week here at Davos, we had a session around the Open Wallet Foundation, which is a new initiative in how we need to build an open interoperable engine collaboratively in the open source. So that's a great new initiative as well. When we think about the Hyperledger Foundation...

Berlind: I just want to pause you there. Open wallet, are we talking about something where we don't have to have 25 wallets, we can just have one and it'll work with everything? Is that?

Barbosa: It is more about creating the engine for an open wallet so that you might have multiple wallets to do different things, but ultimately that the standards and how the engine operates makes it very easy for companies, for payment companies, for telecom companies, and any that want to inter-operate with a wallet; the standards are there. And it's really important from an Open Source perspective that you build that protocol or that pipeline of open standards. So the Open Wallet Foundation has followed that, and I'll talk to you a little bit about that after. Let's focus on the Hyperledger Foundation.

Berlind: Sure, yeah.

Barbosa: Blockchain Journal...

Berlind: You said open wallet. I was like...

Barbosa: Exactly. Well, it is very tied, right? And once again, it's the evolution of these technologies and what the needs are and the communities that come together to actually build them collaboratively, because each one is different. So the Hyperledger Foundation since 2016, so for the last seven years has been building in focus on enterprise-grade Blockchain and blockchain related technologies. In 2016, the foundation was formed. It was actually called the Hyperledger Project at the time, and one project came in, it was a contribution by IBM and digital asset called Fabric, and now it's called Hyperledger Fabric, one of the most used permission Distributed ledgers out there in the marketplace. Also, one of the most mature one that has the biggest commercial ecosystem supporting it.

Berlind: I'm going to pause you because a lot of our members of our audience, they're enterprise people, but they're trying to get up to speed as fast as they possibly can. You said it was a permissioned project. So what does that mean?

Barbosa: So Hyperledger Fabric, like many permissioned distributed ledgers in the world, there's many different options that people can choose from, are really focused on having a network of known participants. So in that network, in that Blockchain network of a Fabric network, let's say everybody that participates that has a node basically on the network, is a known participant. There, is a permission to go into the network. And also there are requirements, for example, on which data points people can see amongst each others in the Fabric ecosystem is called channels so that you can build, maybe you and I can see the information in detail of what we're transactioning on, and the third party can only see that the transaction has been made so then they can go forward in doing it. So a permission network is of known entities in the network itself and the rules and governance of how that network operates and how the players operate within it.

Berlind: And it's the antithesis of something called a Permissionless network. So what is a Permissionless network? Just so we get that out there for those that are watching.

Barbosa: So a public blockchain or permissionless blockchain, anyone can write to it and anyone can read it. I mean, that's the basic principles of it. And there is no this or that because the underlying technology is really the same. The Distributed Ledger Technology, the techniques that are being used, and I have actually seen Hyperledger Fabric in layer one being used as a layer one network.

Berlind: Layer one Blockchain?

Barbosa: So there's a company called Integra Ledger, and they're doing a legal consortium and they have a layer one basically built on Hyperledger Fabric. So it's a permissionless read network. So I think you see the technology actually evolve with the use cases that they are. Now, obviously one of the key things is the crypto part, right?

Berlind: Yeah.

Barbosa: The token part and the speculation on the crypto part.

Berlind: There's none of that going on, is there?

Barbosa: So one of the things that from an enterprise perspective, and we have been telling this story in the marketplace for many, many years, we used to have a slide that said Blockchain does not equal Bitcoin. Now it says Blockchain does not equal crypto because obviously there's many more coins out there in the world. And there's really, really good use cases for crypto, I have no doubt about it, and I truly support that industry. And here in Davos, we've seen a lot of those use cases as well. So yep, does that's help.

Berlind: Even enterprise use cases for crypto because there are some people, some enterprises that are using cryptocurrency for customer engagement or transfer of value. But coming back to the core tenets of Blockchain, the underlying technology behind crypto, that's that other world of crypto. What have you seen out there in the way of appreciation from enterprises of the characteristics of Blockchain? What is it about Blockchain that appeals to them?

Barbosa: I think it is meeting the needs of the enterprise. From a trust perspective, you have to build trust with your partners and the participants of the networks. Or from a consumer perspective, you have to understand where the data's from. For example, there's a lot of wonderful use cases around sustainability and circular economy. When you're buying, for example, your EV car and you want to make sure that that EV battery is coming from a sustainable place, you can now basically track that information going forward, whether it's diamonds or batteries, et cetera. So from a consumer perspective, trust is very important.

Berlind: Why is blockchain any more trustworthy than any of the technologies that came before it? That's the big question, the million-dollar question is we've had technologies to keep track of this stuff before, suddenly Blockchain comes along, and those other technologies are no longer suited to that purpose?

Barbosa: Well, they're suited. If you want to trust a central entity to get that information from the central entity and you trust that entity and you know it hasn't been changed and it hasn't been manipulated, then for sure you need to trust that whatever product that you are engaging with, that you're doing. But blockchain brings upon that transparency and that inability and that you don't have to have a trusted third party. You could have a trusted network of participants that you trust, which is very different from just being completely at the whim of one party with your data, with your information, or verifying a piece of data that might be important for you.

Berlind: This is the big centralization versus decentralization. There's power in numbers, and decentralization is a way to engender more trust than you might have with third-party. And I'll be the first one to note that the human history is littered with incidents where some third party that was in control of data or logic or something, abused that privilege of having that access much to the chagrin of the customers or whoever else was engaged in those ecosystems. Certainly the SEC, I look at them and they publish a report each year about all of the enforcements, and those are enforcements against very big companies that we thought to be trustworthy and turned out not to be, right?

Barbosa: And if you think about today, digital assets, in the future digital assets, I'm sure you've had conversations up and down the promenade this week around the acceleration of digital assets, digital currencies all across different sectors. So it becomes even more and more important that we understand the technologies, and this is what we do at the Hyperledger foundations really also do education around these technologies and how they're going to affect the consumers, how they're going to affect the private sector, and how they're going to affect the public sector. One of the things that is the most heartened to me is that over the last four years, the input of, for example, central banks that have come to the Hyperledger Foundation to learn about open source and open development, because they now understand the importance if you're going to build a new financial system on technology, the importance of doing that in the open development.

Berlind:Oh yeah, I believe Open Source is an incredible precedent for the decentralized nature of Blockchain because Open Source in many ways, there was a lot of resistance, especially among enterprises. What we're going to take some software that was developed by a bunch of people we don't even know? That's crazy. But in the early days, especially, you remember actually, a lot of the open source software was more secure than the proprietary close source software because so many eyes were on it. And so Blockchain is very much that same sort of democratic model in terms of the data and the information that's being stored. So let's go back to the Hyperledger Foundation. You guys have taken technology from IBM. It went from being called Fabric to Hyperledger Fabric, and here we are in 2023. What is going on right now with Hyperledger? Who's taking a look at it and why?

Barbosa: So if we look at Hyperledger, the foundation, so two years ago in October 2021, we rebranded to the foundation because we really are an umbrella of projects. Hyperledger Fabric being the first Hyperledger Sawtooth came in next, and we have competing DLTs, Distributed Ledger Technology frameworks as part of our project portfolio. In 2019, for example, we brought in Hyperledger Besu, which is an Ethereum client, and basically, if it's a permissioned and a public Ethereum client, so Hyperledger Besu came in 2019, and at the time, I'll tell you David, we used to go and talk to the banks and you had mentioned the word Ethereum, and the developers on the side of the room were going like this because they had been playing, they'd been playing with the Ethereum network and building out solutions and smart contracts. But the business folks were like, well, we don't even mention that word in the banks.

And today it's very different. So in 2019, when we brought in Hyperledger Besu, it was really with that vision already of the adoption of something like the Ethereum main net and the smart contracts, the Solidity smart contracts that drive it. So today, like I said, there's 15 different projects and there's also tools and libraries because to make these things work in the enterprise, David, you've been an enterprise software for many years, so you know this, this is not an easy task. You don't just drop a Blockchain technology stack and say, "Now it's we're Blockchain enabled." It has to also tie in very closely to other pieces of infrastructure. And we have tools like Hyperledger Cacti that are addressing interoperability. How do these networks of network? There is not going to be one network of all, even at an industry level. So how do these networks interact with one another?

Berlind: Coming back to Hyperledger Besu, just so that our audience, again, I have to take baby steps here because we're trying to educate the Enterprise on the efficacy of Blockchain to what they're doing. That is the Hyperledger's version of the Ethereum Virtual Machine, if I'm not mistaken. And the Ethereum of the Virtual Machine is essentially a virtual computer if you will, that will run the source code that runs the code that makes smart contracts work on a Blockchain. And smart contracts are essentially, not getting into too much detail, the way in which an enterprise or any other organization would write some custom code to automate some business process or set of transactions?

Barbosa: Correct. And because the smart contracts are in place, you don't need that third-party intermediary to be making the decisions on the business processes.

Berlind: And we've heard this week from multiple interviewees that the idea of a smart contract and taking that human nature out of the settlement of contracts, automating that process is collapsing the time and taking that human element of error out of the whole thing. And so that's one of the other reasons that enterprises really appreciate the idea of a smart contract. But I just wanted to make sure that everybody understands that the Hyperledger Besu is a virtual machine that is just the Java virtual machine that runs this code base that you might develop.

Barbosa: And Besu is a unique project because it really talks to that optionality that enterprises are looking for. Right? And I mentioned before DLTs can certainly run as public DL layer ones. Hyperledger Besu is also an Ethereum main net client. What that means is that you can take Besu, separate of a permission network that you might be running if you want, and run it as a client within the Ethereum ecosystem. And that's really important. The Ethereum Foundation last year selected Hyperledger Besu to be one of the Ethereum main net client program.

So they're helping fund the main net development also of Ethereum. But today, Hyperledger Besu on the permission side is already running some very large digital asset networks amongst the biggest banks in the world. So it's really exciting. I was just at a launch for UDMP, Finality Network, for example, is also using Hyperledger. So the implementations of either Besu as a permission network or as a public Ethereum execution client really helps because those developers, as I mentioned back in 2018, 2019, where we were going from bank to bank talking about enterprise Blockchain, they learned why Blockchain and how Blockchain very much through the Ethereum ecosystem and through those solidity smart contracts that we just talked about.

Berlind: In terms of the Ethereum virtual machine. If you look around, you're seeing that that is becoming the choice virtual machine for a variety of different layer one ledger's that are out there, public ledgers. And we've seen this movie before where some early mover ends up becoming the de facto standard. And enterprises happen to standards; they like to go the way of standards. But then you also see other public ledgers adopting some other virtual machine. You've got this one over here, the EVM, the Ethereum virtual machine and needs Solidity.

But if it's building this growing base within the Blockchain ecosystem and it's becoming a standard, you can see more tools for it. You can see more developers gravitate towards it, that is good for enterprise, all goodness. But if you come over here and you say, okay, well here's a different kind of virtual machine and it runs on a language C++ or Rust or something that already has a following, that also might appeal to enterprises because there's a large base of developers you can tap into right away. What's your recommendation to an enterprise? Do you go this way or do you go this way or both ways?

Barbosa: One of the most exciting things is that innovation's built on innovation. So if you think about what I call purposely built enterprise blockchain protocols, like Hedera, like CasperLabs and others that are really driving that enterprise use case in a permissionless blockchain network. And there is a lot of value in that as well. So I think when we think about where enterprises choose, I at the Hyperledger Foundation, we want to fix the next problem, which is once you make a decision as to which layer one, for example, you want to operate in. And most enterprises are going to work across many layer ones based on the use cases that they need. They need to build something that is purpose-built for what they need. Once you make that decision, you have to deal with things like how do you deal with interoperability between these networks? Between a public blockchain network and another public blockchain?

How do you move mass assets around? So thinking about objects on interoperability perspective, how do you enable businesses to very quickly launch projects that are Blockchain projects with knowing that there's options that they can choose at the DLT layer? So we have a project called Hyperledger Firefly that does that exactly. It supports Solana and Polygon and obviously Hyperledger Fabric, and Besu, and many others. And you use that as a middle layer to launch your projects, your web three projects for examples or your consortiums. But you have the choice as an enterprise now as to what are your developers, back to your language, what are the developers comfortable with if they're Java developers, and that's what they're comfortable with, and that's your premise. There's tools out there for that, that are purposely built.

Berlind: The advantage of standards. And you are no stranger to standards. You were on the data portability project a long time ago. The advantage of standards is that if I build, let's say something in Solidity, and it wasn't an Ethereum virtual machine, and I put that on some distributed ledger, but for some reason I become disappointed with that distributed ledger. I have another distributed ledger that's supporting that same virtual machine. It's much easier to port all my work over to that one and make a move as opposed, and that's the advantage of the standards, it's the opportunity to switch. The switching costs are much higher when you're moving to something that's not quite so standard.

Barbosa: And we even have a new project within the Hyperledger Foundation, we're addressing all these real needs because we know the way that technology and enterprise is used called solang, which is exactly that. It's to be able to do an EBM translation into a Solana network. So these kind of tools are there, and back to your point, you need to build them with standards you shouldn't go along. My message to all the listeners today is that this is a community that's open. The Hyperledger Foundation is open, building basically these enterprise tools, and we need these use cases. We need people to come in and say, "Hey, this is the struggle that we're having because we made a decision. Maybe we made a decision four years ago around going this approach. Where should we actually take when we go into a different production wave as well?"

Berlind: Some recent news as we were launching Blockchain Journal and more of my personal community knew what I was up to. There was a project that looked to kind of implode a little bit. This was the Trade Lens project, which was, as I know at a joint venture between IBM and Maersk, the big shipping company. And I got a lot of emails saying, "You sure you want to do this?"

Barbosa: I bet you did.

Berlind: Yeah, this doesn't look like it's shaping up too well. And my answer to that was, when I looked at the covers of that, that it wasn't necessarily about the technology, that it seemed to be more about how it was organized or something like that. I just didn't feel like it was the technology in my heart. And I'm like no, I'm going forward with launching Blockchain Journal. Have you paid attention to that? Because it was apparently a Hyperledger involved project.

Barbosa: So first, timing is everything. So this is actually a great opportunity for Blockchain Journal to take the opportunity to educate the market around the real technology, real use cases and values of it. Not saying that Trade Lens wasn't real. So there's definitely been a lot of lessons learned, and Trade Lens was not the only project that has closed down or shut down and shuttered. There's been a lot of lessons learned. And if you think about this, we've been at this 10 years max, and you think about even the startup ecosystem, how many startups fail?

Berlind: The majority of them.

Barbosa: Nine out of 10 startups fail. So you can't believe that every single project is going to be successful. And I always say, you also have to have some big failures to learn what not to do. So it is right. You said it, it wasn't about the technology because we're seeing other implementations in the trade finance world that are building efficiencies, that are getting ROI from them. Then it also enables us to look at different approaches and make sure that things like privacy, for example, are set. The one thing when you think about trade finance and even supply chain, is that it's a really a digital transformation problem.

Berlind: Yes.

Barbosa: It is not about the technology. It is a digital transformation problem and getting all the participants in a network like that to be at the same level from a digital perspective and then build that trust amongst the networks that they can interact.

Berlind: So we're talking about in the Trade Lens scheme of things. That was largely a supply chain and a logistics and we're referring to a lot of the partners that had to be involved in that.

Barbosa: Trade finance is what gets everything around the world. During COVID, and we were all like, where's my toilet paper? The thing was, it's supply chain, and how does supply chain happen? There's trade finance behind it that is financing the whole supply chain depending on how complex it is. So when the technology is perfect for trade finance use cases, because of that distributed nature and the need for building trust among these partners, the way that the consortiums are being built, the governance, Hyperledger Foundation is not involved in that.

This is something that the participants of those networks get together, they build the governance models and they iterate on those not models as well. And for us, we're really focused on making sure that technology is purposely built for distributed networks. We have newer trade finance implementations like GSBN out of the Global Business Network, and they have very successfully looked at V2 or V3 of using, in their case, Hyperledger Fabric as well, in implementing, for example, key principles of confidential computing around data privacy needs and really talking about building it collaboratively with all the participants, and that's really exciting. And the last thing, back to the startups, most startups fail not because the technology doesn't work, sometimes it does, but very often it's the business model. Is getting the right business model that is going to make all the participants in that network successful together. And that's really important. And I don't know if anybody has cracked that yet. I mean, businesses are well–

Berlind: Well, speaking of the business model, I think we're talking about a brand-new technology. It's very different from anything that came before it. And sometimes it's new business models that have to come with it. When I looked at the Trade Lens, when that project got shuttered and the way it was organized. In the back of my mind, I was thinking the Saber Systems model doesn't work here. Saber Systems, I don't know if you remember, was American Airlines had this really amazing mainframe based air travel booking system. And then they began to outsource that system to other airlines because other airlines couldn't build anything quite like it.

There was one other one out there from a company called Eastern Airlines, no longer around, called System One. And so I think a lot of companies, big enterprises have been living off of that model where one company is an early mover, gets all the infrastructure in place, optimizes everything, and then the other companies want in, and then they become a service provider to those other companies as well as running their own airline. That model, I don't think translates in the Blockchain world where one company like Maersk can come in and say, okay, "We're going to build that system and everybody's going to share the one that we build, but we govern." I'm not expecting you to get into the question of governance. I know you said that's not you... But I think you mentioned the business model, and that is an old business model that maybe doesn't translate so well into the newer world.

Barbosa: Yeah, I mean, the only point I have is the technology is actually being used in many different ways. We have some use cases. For example, we recently published a case study on our website. You can see many of these case studies from Hitachi. And Hitachi is using Distributed Ledger Technology. They also use Hyperledger. Fabric in an internal, Hitachi is a very, very large company. They do a lot of procurement and they have internal systems amongst themselves that the technology has nothing to do with the governance and is it equal participants and all that, but the technology is what matters, right? And they're seeing huge efficiency gains in how they're doing procurement throughout their organization.

Berlind: Another digital transformation.

Barbosa: Exactly. Right. But it's like pulling the technology away from the use cases sometimes is also important because it is multipurpose, and you can use it, for example, in one company dealing with many divisions trying to buy and purchase the same things. How do you make that more efficient?

Berlind: Yeah, there's digital transformation of the enterprise itself, but then there's digital transformation of a whole industry to make the whole...

Barbosa: Different tiers.

Berlind: Different tiers. Exactly. Well, Daniella Barbosa, you're the chair of the Hyperledger Foundation.

Barbosa: And the executive director.

Berlind: The Executive Director of the Hyperledger Foundation at the Linux Foundation. Thank you very much for joining me here in Davos, Switzerland, and Blockchain Journal.

Barbosa: My pleasure.

Berlind: Yeah. Okay, great.

Editorial Disclosure: This article mentions the Hedera public distributed ledger. At the time this article was published, Swirlds Labs, Inc. sponsored the operation of Blockchain Journal and is also part of a multi-party coalition that contributes to the success of the Hedera ecosystem. For more information about Blockchain Journal's policies regarding editorial independence and neutrality, please read our "Welcome to Blockchain Journal."