Blockchain Wars: Ethereum vs. Hyperledger
by Matt Lundy
Blockchain wars are coming to an enterprise near you. The world of Blockchain is a complicated one that is often hard to make sense of. Different Blockchains have different approaches and applications; knowing these differences is vital to deciding which one, if any, will work for your enterprise.
Ideological Disputes Center Around Permission
The evolution of these two types of Blockchains can be traced back to the fundamental differences in their approach to Blockchain principles. Ethereum is similar to Bitcoin and takes an approach much closer to the original design goal of Blockchain: complete transparency for all. It is a permissionless, public or private chain requiring complete consensus for every transaction.
On the other hand, Hyperledger is designed more for business application, enabling the ability to restrict visibility of transactions and other information. It is permissioned and private, only requiring a subset of nodes/users to come to consensus to allow transactions.
Permission Differences Detailed
There’s a lot to unpack in the technicalities of the above differences. Let’s start with permission.
1. Permissionless Blockchains:
If a Blockchain is “permissionless,” then it allows anyone to join, become a user, and take part in validating the chain to achieve consensus. Bitcoin and Ethereum are the two shining examples of permissionless Blockchains, allowing anyone to take part. “Consensus” here is the concept of all the nodes on the chain communicating and updating the chain with new information, such as which transactions recently occurred. This is important to make sure that all transactions are fair game, and that no one “double-spends” (e.g., tries to use the same coin—or other currency—in two different payments).
2. Permissioned Blockchains:
If a Blockchain is “permissioned,” then only certain users are allowed to validate block transactions, and thus update the chain. This is an approach that appeals to enterprises and governments because allowing anyone on the chain to see and validate each and every transaction does not support privacy requirements. Limiting validation to only designated/approved users would allow enterprises to choose who they want to be contributing and validating members of the chain.
An additional benefit for enterprises is the reduced computer power required in a permissioned chain. A permissioned Blockchain can allow consensus to happen somewhat locally, only requiring those taking part in the transaction to verify. This reduces the load overall, as not every user has to validate every transaction. As more Blockchain transactions go mainstream, the decision of permissoned versus permissonless will become a much more critical selection criteria both for privacy and computing power.
Smart Contracts Is a Draw
In the all-important realm of Smart Contracts, Ethereum and Hyperledger don’t differ that much in their approach. Both Blockchains include roughly the same ability to build Smart Contracts through their respective Smart Contract development platforms: Solidity for Ethereum and Chaincode for Hyperledger. In this way, they both surpass Bitcoin, but they both lack the use of legal language incorporation that R3 Corda employs. R3, which offers Corda Enterprise, is proving to be popular with financial services organizations, who also are some of the primary investors in R3.
Blockchain for the Enterprise
Enterprises are attracted to private Blockchains for the enterprise–such as Hyperledger—over public ones like Bitcoin or the public aspect of Ethereum, and for seemingly good reason. The privacy and efficiency of a private chain offers clear incentives for an enterprise that don’t seem to be challenged in any significant way by public chains. Moving forward, there is no foreseeable reason to expect a change in this.
Further reading on Blockchain from Aragon Research: