The Hyperledger project is a cross-industry blockchain collaboration launched by the Linux Foundation in December 2015. It focuses on blockchain industrial solutions for finance, banking, IoT, supply chains, healthcare, manufacturing, technology, and other sectors. Currently, it has over 190 member organizations, including industry leaders such as IBM, Intel, American Express, Daimler, Airbus, Fujitsu, Hitachi, Cisco, Accenture, JPMorgan, SAP, NEC, and Baidu.
Hyperledger is an umbrella project, which incubates separate blockchain projects focused on distinct industrial use cases and solutions. Hyperledger projects are built from the ground up to address specific business models and their issues. They are intended as a plug-and-play solution to boost the consortium members' business performance. For that purpose, the fundamental principle to all Hyperledger projects is a modular approach. All components of the Hyperledger ecosystem are designed to be interoperable and interchangeable, meaning that they can connect with any other component within that framework. They also must be able to connect with legacy corporate IT systems for enterprise resource planning and so on. Ideally, they would be also able to connect with open public blockchain networks such as Bitcoin and Ethereum.
In their own words, Hyperledger is incubating and promoting enterprise-grade, open source business blockchain technologies, including distributed ledgers, smart contract engines, client libraries, graphical interfaces, utility libraries, and sample applications. Hyperledger provides the underlying open source software, on top of which anyone can set up apps to meet business needs.
So, Hyperledger aims to provide a blockchain platform for distributed applications, kind of like Bitcoin and Ethereum do. But make no mistake, despite being an open source collaboration, Hyperledger targets industrial applications, meant to be deployed mostly as private permissioned blockchains. As they themselves say, the optimal focus of Hyperledger is to advance industry goals of distributed ledgers and smart contracts. The overarching Hyperledger design philosophy for permissioned blockchain networks follows a modular approach that enables extensibility and flexibility.
The modular approach they are talking about looks similar to the following image:
The reference architecture of Hyperledger identifies several key layers or components: consensus, smart contracts, communication protocol, data storage, cryptography, ID management, governance, APIs, and interconnectivity. This is a major difference from the design of existing public blockchains, such as Bitcoin and Ethereum, where everything is packed into the same blockchain protocol. Therefore, you can imagine that Hyperledger provides more flexibility.
This means that enterprises can choose the consensus algorithm, the smart contract programming language, level of encryption, and so on, that best fit their business needs.
As one of the Hyperledger whitepapers puts it:
The main benefit of the modular approach is flexibility. With this fundamental principle in mind, Hyperledger develops a range of technological solutions for business applications, including distributed ledgers, smart contracts, code libraries, and graphical user interfaces. It also provides entire sample applications. These common buildings blocks can be reused in many different projects. Any component can be modified independently without affecting the rest of the system. Hyperledger components can be mixed and matched to create tailor-made, enterprise, value-added systems. This framework creates a perfect environment for innovation in the corporate blockchain space.
Let's have a look at it in a bit more detail.