But before we get into that, let's back up. A good way to understand Fabric is to look at some of the new and emerging use cases.
IBM Use-Case: Cross-Border Money Exchanges
In October 2017, IBM announced the launch of a Fabric-based blockchain use case to help with universal cross-border payments. How will it work? IBM gives this example: In the future, a farmer in Samoa could enter into a trade contract with a buyer in Indonesia. The blockchain would be used to log contract terms, manage trade documentation, allow the farmer to put up collateral, and finalize transaction terms with immediate payment. The entire process, which currently is a paperwork and compliance nightmare, would happen relatively easily, IBM says.
The project is a partnership with KlickEx Group, a United Nations-funded financial services company, and Stellar.org, a nonprofit that supports open-source blockchain networks for financial services on the project.
With this new technology, merchants and consumers will be able to send money across borders in near real-time, accelerating a process that normally takes days. Specifically, the new blockchain network enables the electronic exchange of 12 currencies across the Pacific Islands as well as Australia, New Zealand and the United Kingdom.
Oracle Use-Case: Business Loans
Oracle also announced its Fabric-based BaaS offering in October 2017. Its initial use case involves business loans.
AuraBlocks is using Oracle’s Blockchain Cloud Service to help one of its clients, Biz2Credit, verify the identity of borrowers.
Biz2Credit advances funds to merchants based on credit card receipts. With the AuraBlocks technology, the loan application information is verified within the blockchain ledger. So the next time the merchant wants a loan, he or she can use the same information without going through the verification process again, SDX Central reports.
“[Biz2Credit] thought there was an opportunity to help the borrowers lower their rates and get access to more money by using the Blockchain Cloud Platform,” AuraBlocks CEO Richard Brownstein tells SDX Central. “But they didn’t know how to put it all together. We designed technology on the Oracle Blockchain.”
It's not just the merchants who benefit: “The analysis that was completed by our team reveals that implementing the AuraBlocks technology developed on the Oracle Blockchain Cloud Service could reduce our operational costs by 25 percent on a $1 billion book of business,” according to Venkatesh Bala, chief risk officer for Biz2Credit.
Early 2018 Use-Case: Fabric For Healthcare
In September 2017, Change Healthcare announced plans to go live with its claims-processing blockchain in early 2018. Change Healthcare’s Intelligent Healthcare Network is using Fabric for its application design and development.
The company calls this the first blockchain solution for enterprise-scale use in healthcare. According to HITInfrastructure, Change Healthcare will contribute code back to the open-source community so that other healthcare organizations can improve their blockchains.
So what makes Fabric attractive? Flexibility, for one thing. The modularity of Fabric’s architecture enables network designers to plug in their preferred implementations for components, making it scalable and flexible.
Among the most requested areas for modularity is “bring your own identity,” according to IBM, “Some multi-company networks already have identity management and want to reuse instead of rebuild. Other components of the architecture that can be easily plugged in include consensus or encryption, where some countries have their own encryption standards.”
Other components that can be easily plugged in include consensus, membership services and encryption — important in cases where countries have their own encryption standards.
Ledger data can be stored in multiple formats and consensus mechanisms can be switched in and out. This last bit is especially important: It allows for a consensus mechanism that best represents the relationships that exist among participants. As with privacy, needs vary.
Private and Transparent
Fabric aims to provide a balance between sometimes-conflicting goals: transparency and confidentiality.
Because Fabric is a platform for permissioned networks, all participants have known identities. That’s important, especially in highly regulated sectors like finance and healthcare: Regulations such as Know Your Customer (KYC) and HIPAA require knowledge of who the members of the network are and who is accessing data.
The permissioned blockchain (also called a consortium or federated blockchain) is a hybrid. Transactions are visible only to the parties with permission to view them — not the whole network. So, in Fabric, you could have a transaction visible to one person or a specific group of people, but not visible to others — something that makes sense for many businesses.
Transactions can remain private, but participants cannot be anonymous.
Compare this to a public blockchain, where everything is visible. Anyone can read the chain and write new blocks into it.
You can also use Fabric to build private blockchain networks. With this kind of blockchain, new nodes must either be validated by those who started the network or by a set of rules those people put in place. Private blockchains are generally best for applications that are internal to a single company.
Programmable Smart Contracts
Embedded logic in smart contracts — called “chaincode” in Fabric — can automate business processes and create massive efficiencies. Like Ethereum smart contracts, Fabric’s chaincode can be used to directly control digital assets using the conditions of an agreement. Enterprises are looking to offer smart contract functionality to clients in easy-to-use applications.
All Business, No Currency
Fabric doesn’t require a built-in cryptocurrency. None of the Hyperledger projects do — nor will they ever, at least according to Brian Behlendorf, executive director of the Hyperledger Project.
This decision distances Fabric from the lingering misconception that blockchain = bitcoin = dark web. Blockchain continues to move beyond cryptocurrency, but for many people, it still evokes something vaguely sinister.
“If you say ‘blockchain’ to most people, they immediately think Bitcoin — and still have no idea what it is,” John Engates, chief evangelist at Rackspace, tells eWeek.
It may be less sexy and less flashy than bitcoin, but that’s perfectly fine for enterprise customers.
“While cryptocurrency is not necessarily the future, it looks as though blockchain will be,” Carlo R.W. De Meijer, the founder, and owner of MIFSA, writes in the Dec. 31, 2017 issue of Finextra. “Those who nowadays persevere with their blockchain initiatives should not only be aware that the technology is still at a very early stage of development, but also understand that this isn’t really about technology, but about business.”
We couldn't agree more.