Master of Computer Applications

23MCAIS304 – Blockchain Technologies

Module 2

Blockchain Hyperledger and

Ethereum for Business
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Module No.-2

TOPICS

MODULE-2
Hyperledger – Blockchain for Businesses:
Technical requirements Hyperledger overview - Blockchain-as-a-
Service (BaaS), Architecture and core components,
Hyperledger Fabric model, Hyperledger Fabric capabilities,
Smart Contract Basics, Creating a Smart contract

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Dr Murugan R Associate Professor School of CS & IT
Module No.-2

Hyperledger Overview
•Hyperledger is an open source initiative focused on covering core
industry needs with Distributed Ledger Technologies (DLT)
•It's a group program hosted by the Linux Foundation in
collaboration with several industry giants in information
technology, banking, logistics, transportation, finance,
manufacturing, and IoT.
•Hyperledger is the only distributed ledger technology framework
that was built to be granular for businesses that were in need of
permissioned blockchains to achieve better control over an entire
system.
•Hyperledger does not support any cryptocurrency platform or
related system, as it is more about solving critical business problems.

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 Blockchain-as-a-Service (BaaS)
• Blockchain-as-a-Service (BaaS) is a cloud-based service
that enables customers to build, host, and operate
their blockchain applications, smart contracts, and
functions on a cloud-based infrastructure.
• It works similarly to the concept of Software-as-a-
Service (SaaS), where instead of having to develop
everything from scratch, users can leverage a pre-
existing framework to quickly deploy and manage
blockchain networks.

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 Key Components of BaaS

1. Infrastructure Management:
1. Cloud Hosting: BaaS providers offer cloud-based
infrastructure where blockchain applications are deployed.
This infrastructure includes computing power, storage, and
networking.
2. Scalability: Users can scale the blockchain network
according to their needs without worrying about the
underlying infrastructure.
3. Security: BaaS providers ensure that the blockchain
network is secure, offering services like encryption, identity
management, and network monitoring.

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2.Blockchain Management:
•Network Deployment: BaaS allows users to create and
deploy their blockchain networks quickly without the
need for extensive coding or infrastructure setup.
•Consensus Mechanisms: Users can choose the type of
consensus mechanism (like Proof of Work, Proof of
Stake, etc.) that suits their application.
•Smart Contracts: BaaS platforms often include tools
for developing, testing, and deploying smart contracts,
which are self-executing contracts with the terms
directly written into code.

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3.Integration Services:
•APIs: BaaS platforms typically provide APIs for
integrating blockchain with existing applications or
other services.
•Interoperability: BaaS often supports interoperability
between different blockchain networks, allowing for
data and asset exchange across different blockchain
systems.
•Data Management: BaaS offers tools for managing the
data stored on the blockchain, including retrieval,
backup, and compliance with data protection
regulations.

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4.Monitoring and Maintenance:
•Real-time Monitoring: BaaS includes dashboards
and tools for real-time monitoring of blockchain
networks, transactions, and smart contracts.
•Upgrades and Patches: The service provider
handles updates, security patches, and any
necessary upgrades to keep the blockchain network
functioning optimally.
•Support and Troubleshooting: BaaS providers
typically offer customer support and
troubleshooting services to address any issues that
arise.

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 Advantages of BaaS
• Cost-Effective: Users do not need to invest heavily in
hardware, software, or a team of blockchain experts.
BaaS provides a cost-effective way to leverage
blockchain technology.
• Speed of Deployment: BaaS allows businesses to
deploy blockchain applications quickly without
worrying about the underlying infrastructure and
maintenance.

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• Focus on Core Business: By outsourcing blockchain
management to a BaaS provider, businesses can
focus on their core activities rather than the
complexities of blockchain technology.
• Flexibility and Customization: BaaS providers often
offer a range of customization options, allowing
businesses to tailor the blockchain network to their
specific needs.

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 Use Cases of BaaS
•Supply Chain Management: Businesses can use BaaS to track products
throughout the supply chain, ensuring transparency, security, and real-
time monitoring of goods.
•Financial Services: Banks and financial institutions can deploy
blockchain networks to handle secure and transparent transactions,
reducing the risk of fraud.
•Healthcare: BaaS can be used to manage patient records, ensuring that
data is secure, immutable, and accessible only to authorized personnel.
•Government Services: Governments can use BaaS to implement
blockchain-based identity management systems, voting platforms, and
secure record-keeping.
•Energy Sector: Energy companies can use BaaS to manage
decentralized energy trading platforms, enabling peer-to-peer energy
transactions.

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 Examples of BaaS Providers

• Microsoft Azure Blockchain Service: Offers tools for building,

managing, and expanding blockchain networks on the Azure
cloud platform.
• IBM Blockchain Platform: Provides a comprehensive platform
for developing and deploying blockchain applications with a
focus on enterprise-grade solutions.
• Amazon Managed Blockchain: A fully managed service by
AWS that simplifies the creation and management of scalable
blockchain networks using open-source frameworks like
Hyperledger Fabric.

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Module No.-2

Blockchain-as-a-Service (BaaS)
•Since the birth of cloud computing, one of the hottest terms that
has changed the way a product or a service can be delivered or
deployed is X (anything) as a service, where X is any form of
software or application.
•With the Azure Blockchain service, Microsoft became the first
software vendor to launch BaaS in 2015.
•Microsoft, in close collaboration with ConsenSys, announced that it
was going to develop an Ethereum BaaS on the Microsoft Azure
platform.
•SAP launched its own BaaS platform and named it Leonardo, which
is a Hyperledger-based cloud service.

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Dr Murugan R Associate Professor School of CS & IT
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Program Goal of Hyperledger
•Community-driven infrastructure: As the Hyperledger project is
supported by several private and government institutions, it
presents a
 highly efficient and open community-driven environment
•Enterprise-grade framework: Unlike the cryptocurrency blockchain,
Hyperledger was developed to support businesses to perform
secure and reliable transactions over DLT networks
 Building technical communities: The project is also aimed at
building a more effective and larger technical community to
innovate and develop blockchain smart contracts and other
related code
Awareness: It's a great way to spread awareness to businesses
and other institutions about blockchain technology and its
business use cases
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Hyperledger Core Components

•Hyperledger is an open source framework that allows businesses to
build enterprise-grade solutions based on DLT.
Building Blocks of Hyperledger (Core Components):
•Shared ledger: It is an append-only ledger, and it stores the blocks
in chronological order
•Consensus algorithm: It's a method to achieve a common
agreement over a change in the distributed ledger
•Privacy: The main purpose of building the Hyperledger was to
achieve a permissioned network for secure and reliable transactions
in mission-critical business environments
•Smart contract: This is a granular method to plan and process
transaction requests

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Hyperledger Frameworks

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Hyperledger Architecture
•Consensus layer: This is mainly responsible for generating an
agreement on each order and validating transactions based on a
predefined set of rules
•Smart contract layer: This takes care of transaction requests and
applying business logic
•Communication layer: This facilitates a platform that allows nodes
to communicate over peer-to-peer transport
•Data store abstraction: This allows various data sources to be used
by other modules
•Crypto abstraction: This allows without impacting other modules
different crypto algorithms to be used.

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• Identity service: This enables the deployment of root of trust

during blockchain setup with additional authentication and
authorization cover
• Policy service: This is responsible for managing several policies,
such as the
 consensus policy
 endorsement policy and
 the group management policy
• API: This enables clients and applications to talk to blockchain
modules
• Interoperation: This provides interoperability among different
blockchain instances

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Iroha:
•Hyperledger Iroha is a blockchain framework contributed
by Soramitsu, Hitachi, NTT DATA, and Colu.
•It is designed to be used by mobile application developers under
Android and iOS packages.
•It has a simple design with the C++ programming package along with
the YAC consensus algorithm.
Sawtooth:
•It is contributed by Intel and is built to use several consensus
algorithms based on the size of the network.
•By default, Hyperledger Sawtooth uses Proof of Elapsed Time (PoET)
to achieve consensus among nodes.
•It is designed for versatility to support both permissioned and
permissionless implementations.

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Indy:
•Hyperledger Indy is a distributed ledger to achieve business
solutions for decentralized identities and provides interoperability
across several supporting Distributed Ledger Technologies (DLTs).
• It is designed to achieve privacy across nodes and
throughout transactions.
Burrow:
•Hyperledger Burrow is a permissionable smart contract that
provides a
 modular blockchain client with a permissioned smart contract
interpreter built with Ethereum Virtual Machine (EVM).

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Comparison of Hyperledger Frameworks

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Hyperledger Fabric Model

•The Hyperledger Fabric project is powered by the IBM
blockchain platform and is hosted with the Linux
Foundation, with its
 key highlight over confidential transactions
being a permissioned network,
 programmable business login, and
 no need for cryptocurrency computational
methods

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Hyperledger Fabric Core Components
• Nodes: There are the following three roles in the Hyperledger
network:
i) Clients: Clients propose the transaction request on the
network.
–It has to be connected to a peer to participate in blockchain.
–The client has the right to connect the desired peer to the
network.
ii) Peers: Peers listen to the ledger update and keep a copy of
it. Based on their nature, there could be two further types:
• Endorsing peers: Endorsers simulate and endorse
transactions
• Committing peers: Committers validate transactions
before committing transactions in the network
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iii) Ordering Service: The ordering service accepts endorsed

transactions,
arranges and orders them into a block, and finally
delivers it to committing peers
-The ordering service also provides a shared and secure
communication channel for clients and peers.
-It acts as a medium for broadcasting transactions and helps us
deliver this to peers.
Ledger: Just like with Bitcoin and Ethereum, the Hyperledger
ledger provides a verified list of all valid and invalid transactions
throughout the system's operation.
•It is created by an ordering service and is kept with all the peers
in the network.
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• https://hyperledger-fabric.readthedocs.io/en/release-
1.4/write_first_app.html

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• Channel: The Hyperledger Fabric channel is a restricted

communication medium for nodes to conduct confidential
transactions.
• A channel is specific for
 a member,
 a shared ledger,
 a chaincode application, and
 the ordering service node.
• Each peer who joins the channel has to get a grant from
the Membership Service Provider (MSP),
 which verifies each peer to its respective channel peers and
services.

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Dr Murugan R Associate Professor School of CS & IT
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The World State: This reflects the current state of data about all the
assets in the network.
•The data is securely stored in the following format:
– LevelDB: This is the default database for Hyperledger Fabric, and
it simply stores key/value pairs.
– CouchDB: This is best suited for web and native applications and it
speaks JSON natively. It supports binary for all data storage needs
•Chaincode: Chaincode manages the business logic agreed and created
by members in the network.
•It is a program written in Go—Node.js:
– LevelDB: This is a default programming language that runs over a
secured Docker container and manages the ledger state.
– CouchDB: is database programming language that stores JSON
objects. It also supports key range, composite, and full data-rich
queries.
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Consensus: Consensus is the process of achieving an

agreement on a set of transactions to be added to the
ledger.
•In Hyperledger Fabric, consensus is achieved with the
following three steps:
– Transaction endorsement
– Ordering
– Validation and commitment

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Working Procedure of Hyperledger and Transaction

processing
1.Transaction proposal:
•In Hyperledger Fabric, the process starts with the client application
sending transaction proposals:
 Each client application proposes transactions to endorse peers for
the simulation and endorsement process.

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2. Endorsers send RW sets to the client:

•Each endorsing peer simulates the proposed transaction and stores
sets of read and written data named RW sets.
•These sets are signed by endorsing peers and are returned to the
client application

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3. Client Application Service:

•Once a client application receives the RW set and endorsed
transactions, it has to submit these to the ordering service.
•This method keeps working, regardless of the transaction
endorsement and RW set submitted by other client applications:

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4. An orderer sends transactions in blocks to committing peers:

The ordering service accepts both RW sets and endorsed
transactions and
 arranges them into blocks, then forwards them to committing
peers:

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5. Committing peers validates each transaction in the block:

•The committing peer validates the transactions to ensure the RW
set matches the current world state.
•Once the committing peer validates the transaction, the
transaction is updated to the ledger and
 the world state is automatically updated with write data from
the RW set:

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Identity verification:
•At each step of the transaction flow, from endorsement
to version check, identity verification remains a
continuous process.

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Characteristics Bitcoin Ethereum Hyperledger

Permission restrictions Permissionless Permissionless Permissioned

Restricted public access

Public Public or private Private
to data

Consensus PoW PoW PBFT

High node scalability, low High node scalability, low Low node scalability, high
Scalability
performance scalability performance scalability performance scalability

Low, decentralized Low, open governance

Centralized regulation Medium, core developer
decision making by model based on the Linux
(governance) group, but EIP process
community/miners model

Pseudonymity, no Pseudonymity, no Pseudonymity,

Anonymity encryption of transaction encryption of transaction encryption of transaction
data of data data

Native currency Yes, Bitcoin Yes, ether No

High possibility, tuning

High possibility, tuning
complete virtual
Limited possibility of complete scripting of
Scripting machine, high-level
stack-based scripting chaincode, high-level Go
language support— 49
language
Solidity
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Hyperledger Fabric Capabilities

i) Identity Management:
•To turn a permissioned network, Hyperledger Fabric provides a
membership identity service that maintains user IDs and then
authenticates each of one of them in the network.
•One user ID can be allowed to invoke a chaincode application, but
can be blocked to turn up a new chaincode.
ii) Efficient processing:
•Hyperledger assigns a role for each node based on transaction
ordering and commitment.
•The overall performance improves as the concurrent execution
increases and improves the time to deliver each order.

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iii) Privacy and Confidentiality:

•Private channels restrict the messaging paths to provide transaction
privacy and confidentiality for specific network members.
•All data, including member information, transactions, and channel
details, remains invisible and inaccessible to other network
members.
iv) Chaincode Functionality:
•This regards chaincode applications and is the business logic of
Hyperledger Fabric.
•Chaincode ensures that all transactions that transfer ownership are
subject to its rules and requirements.
•The operating parameters of the channel are usually defined by the
system chaincode, whereas validation system chaincode defines the
requirements for endorsing and validating transactions.

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 Hyperledger Fabric: Enhancing Security in Business
1.Permissioned Network: Blockchains
•Only approved participants can join the network, reducing the risk of
unauthorized access.

2.Identity Verification:

•Every participant has a digital identity, so all actions are tracked and
verifiable.

3.Data Privacy:
•Allows private channels where only specific participants can view certain
transactions, ensuring confidentiality

•Private Data Collections further protect sensitive data, shared only

among select participants.

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•Uses endorsement policies where only approved parties can
confirm and validate transactions, preventing unauthorized
changes.
5.Separation of Roles:
•The network separates transaction processes (execution,
ordering, and validation), making it harder for hackers to attack.
6.Immutable Ledger:
•Once a transaction is recorded, it cannot be changed, ensuring
the integrity of records.
7.Encrypted Communication:
•Data sent between participants is encrypted, keeping it safe from
interception.
8.Fault Tolerance:
•The system can handle failures or attacks on some nodes without
compromising the entire network.

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 What is Double Spending?
Double spending is a potential problem in
digital transactions where the same digital asset
(like cryptocurrency) is spent more than once. In
traditional physical currency, once you hand
over money, it's gone from your possession, so
you can't spend it again. However, with digital
currency, it's theoretically possible to copy or
reproduce the asset and use it multiple times.

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How Blockchain Prevents Double
Spending:

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 Smart Contract
• A smart contract is a self-executing program
stored on a blockchain. It automatically
enforces agreements when pre-defined
conditions are met. These contracts are
transparent, secure, and eliminate the need
for intermediaries (like lawyers or banks).

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 How It Works
• Written as code and deployed on a
blockchain.
• When the conditions in the contract are met,
the contract executes itself.
• Transactions are verified and recorded
automatically.

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Types of Smart Contracts:

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 Modular architecture of Hyperledger

• The modular architecture of Hyperledger Fabric is

designed to provide flexibility, scalability, and
customization for various blockchain use cases.
• It allows components to be swapped or configured
to suit different requirements. Here's a breakdown
of its key components:

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 Modular architecture of Hyperledger
Fabric
1. Chaincode (Smart Contracts)
•Role: Chaincode contains the business logic that
defines how transactions are processed.
2. Peers
•Role: Peers are nodes that maintain the blockchain
ledger and validate transactions.
3. Ledger
•Role: The ledger stores all the transaction data.

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4. Consensus Mechanism
•Role: Ensures that transactions are ordered and
validated before being committed to the ledger.
5. Membership Service Provider (MSP)
•Role: MSP manages identities and access
control within the network, ensuring only
authorized participants can transact.

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6. Ordering Service
•Role: Orders transactions into blocks and
delivers them to peers.
7. Channels
•Role: Channels allow private communication
among specific network participants.
8. Endorsement Policies
•Role: Define which participants must validate
and approve a transaction for it to be
considered valid.

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8.Private Data Collections
•Role: Allow subsets of organizations to share
private data without exposing it to the entire
network.

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 Topics covered in module-2
• Hyperledger
• Its components
• Blockchain-as-a-Service
• on smart contracts
• permissioned and permissionless

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Module No.-2

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