Around 2013, interest began to stir about blockchain, beyond Bitcoin. With the launch of Ethereum, executives and industry leaders became captivated by the potential of smart-contracts to govern programmable agreements, and reduce dependence on trusted intermediaries in commerce. While some had no interest in an independent digital currency, executives and industry leaders from multiple sectors became interested in creating permissioned ledgers and explore the use of blockchain for business.
Today, there are a number of open-source solutions for deploying permissioned ledgers. Let’s take a look at where they come from, track the course of their developments, and one production example of a clear use case.
Commonly Confused Terms
Public Blockchains are Public and Permissionless
A Private Ledger is Private and Permissioned
A Consortium Network is Public and Permissioned
The records of a public blockchain may be read by anyone, and anyone may transact upon it freely.
The records of a private blockchain are revealed only to authorized network participants.
On a permissionless network, anyone may freely transact and participate in consensus according to its protocol.
On a permissioned network any action may require specific authorization.
Consortium Networks are Public and Permissioned, allowing anyone to read or transact upon the ledger while restricting consensus to authorized participants.
All blockchains are distributed ledgers, but not all distributed ledgers are blockchains. Rather than creating blocks of transactions for validation, distributed ledgers use other techniques, commonly validating each transaction as it occurs.
Permissioned Ledger Enthusiasts
This article argues, however, that the key innovation of digital currencies is the ‘distributed ledger’ which allows a payment system to operate in an entirely decentralised way, without intermediaries such as banks. Innovations in Payment Technologies & Emergence of Digital Currencies—Bank of England
In May of 2014, a $100,000 bounty was announced for the creation of a software platform to replace the Bitcoin Foundation, out of concerns over a lack of transparency. Some said the foundation had become too much like the systems Bitcoin was made to replace. In response, Casey Kuhlman, Dennis McKinnon and Preston Byrne of Monax led an effort to create the worlds first Decentralized Autonomous Organization.
It is our intention that ÐAOs implemented using the Eris framework will serve as technology demonstrators for a new kind of decentralised and consensus-based organisational governance, on a fully transparent and trustless basis, which to our knowledge has never before been attempted.
This effort became Eris Industries, and grew into an entire open-source Distributed Application Software Stack. This stack included a distributed application server (Decerver), to synchronize operations between distributed file-systems, blockchains, a scripting layer, and a system for integrating markdown-based legal contracts with its smart contracts network. Their offerings included a permissionable blockchain and implementation of the Ethereum Virtual Machine (EVM).
While Eris’ distributed software stack didn’t replace the Bitcoin Foundation, their general purpose open-source software has been used by numerous other ventures, and their permissioned instance of the EVM was later submitted to the Hyperledger Foundation under the name Burrow.
Distributed Ledger Proliferation
If Bitcoin captured rebels and visionaries, Ethereum’s smart-contracts enticed executives and government officials around the world. Eris opened the door to enterprise exploration in a permissioned setting. Throughout the year, permissioned ledger initiatives proliferated, and the sense arose that Bitcoin heralded not one, but two revolutions — offering distinct utility to both anarchists and executives.
At the beginning of 2015, IBM presented a functional IOT demo, built from the Ethereum prototype, claiming blockchain to be the future of IOT. Hyperledger is another early example, wishing to revolutionize finance with a general-purpose customizable ledger. Later acquired by Digital Asset, its name and IP later donated to the Hyperledger foundation.
Multichain was among these early efforts to develop a permissioned blockchain. Based on a fork of Bitcoin Core, Multichain enables future Bitcoin enhancements to be merged into its code and changes only the handshaking process by which nodes connect. It was made to enhance, be fully compatible with Bitcoin and enable interoperability between Bitcoin and private networks.
R3 began exploration of this nascent space starting in early 2014, from there regularly meeting with industry leaders to determine the best use and design. Less than two years later, those meetings had developed into a consortium of 42 major banks. Near the middle of ‘15, Tim Swanson published a whitepaper, Consensus-as-a-Service (CaaS), the first to clearly delineate between permissioned and permissionless networks.
While the work of these firms is spirited, it’s not without critics. In September '15, Bitcoin Magazine published Nick Szabo on ‘Permissioned Blockchains’. The article warns that although these systems may prove of value, they could suffer similar problems as centralized networks currently in place. The article also echoes Szabo’s admonition that banks must go permissionless if they want the benefits of blockchain.
"bureaucracies are so heavily invested in the expertise and importance of local regulations and standards that it’s extremely difficult for them to cut the Gordian knot and implement seamless global systems,” said Szabo. “So they keep trying to re-inject points of control, and thus points of vulnerability, into blockchains, e.g. through ‘permissioning’; but this nullifies their main benefits, which come from removing points of vulnerability.”
Rise of the Hyperledger Foundation.
Its founding members included Accenture, ANZ Bank, Cisco, CLS, Credits, Deutsche Börse, Digital Asset Holdings, DTCC, Fujitsu Limited, IC3, IBM, Intel, J.P. Morgan, London Stock Exchange Group, Mitsubishi UFJ Financial Group (MUFG), R3, State Street, SWIFT, VMware and Wells Fargo.
Hyperledger’s intent is to support efforts across the blockchain ecosystem. This cross-pollination of efforts will improve the security and efficiency of the underlying code, enabling the enterprise to focus on custom solutions rather than building core protocols from scratch.
In February ‘16, IBM donated its Open Blockchain to the Hyperledger foundation. Built the previous quarter, it was given the name Fabric, its modular nature is designed to ease integration with existing architectures and facilitate the process of upgrading individual components. It has a permissioned design and supports smart contracts.
Intel offered its Sawtooth codebase to the foundation, in April, offering separate transaction and consensus layers, the novel Proof of Elapsed Time consensus, and transaction families supporting robust implementations for common transactions. Sawtooth was accepted into the Hyperledger Foundation, November ‘16.
At nearly the same time Iroha also joined the open source collaborative, contributed by Soramitsu, Hitachi, NTT Dat, and Colu. Iroha seeks to complement other blockchain frameworks by building reusable components in C++, comes with the YAC consensus algorithm, and was made to facilitate the creation of end-user applications, specifically mobile and web apps.
A Consortium Framework
Around the same time, Evernym published its initial identity white paper and began work on Plenum, an implementation of RBFT consensus to deploy a public-permissioned blockchain network, supporting the development of a decentralized public key infrastructure (DPKI).
In September, the open-source Sovrin codebase was donated to the Sovrin Foundation: a private-sector, international non-profit established to govern a global public utility for self-sovereign identity.
we’ve seen instances in permissionless ledgers that led to blocks being orphaned or a smart contract being hacked. In both cases, code maintainers had to choose how to resolve the issue in the ledger. Their choice was a legitimacy problem because they had to convince the validators to move with them and support it. A permissioned system doesn’t necessarily prevent these problems, but it can provide a clear, unambiguous judicial process for solving the problem. Phil Windley - Self-Sovereign Identity and the Legitimacy of Permissioned Ledgers
The Sovrin Trust Framework provides rules for the behavior of validators, a judicial process, binds them to contracts, and provides guidelines for identifying validators (Stewards). Besides validation of transactions, Sovrin Stewards also accept or reject changes to the open source code, now maintained by the Hyperledger Foundation.
Evernym’s work on Sovrin does not exist in a evacuum, but is a culmination of, and inter-related with, the work of numerous independent parties sharing a passion for the privacy-focused design of an Internet-wide identity layer. These efforts stretching back to 2005, have gained momentum with the rise of blockchain, the UN Sustainable Development Goals nand the GDPR.
Permissioned Ledger Contenders
In October of 2016, JP Morgan announced their development of Quorum, a permissioned implementation of Ethereum supporting data privacy to enable interaction between public and private blockchains and allowing for private, secure, peer-to-peer transactions.
In November of 2016, R3 open-sourced Corda, it’s permissioned distributed ledger platform. Corda features private transactions and smart contracts based upon Smart Contract Templates: foundations, design landscape, and research directions, Barclays, University College London.
The following February, a global consortium of enterprises from the oil and gas industries, the financial sector and development firms to found the Enterprise Ethereum Alliance (EEA), an open source foundation dedicated to developing Ethereum into an enterprise-grade blockchain.
EEA members include Accenture, BBVA, BP, Cisco, Consensys, Intel, JP Morgan, Microsoft, Tendermint, UBS, Wipro, and about 30 others. Early work of the EEA includes hosting technical working groups, development of the EntEth 1.0 reference architecture, and supporting the Quorum Consortium Network in the Azure Marketplace.
Decentralized Identity for All
Interest blockchain soared over the course of 2017, along with the price of Bitcoin. In May of that year, the Hyperledger Foundation announced the introduction of the Sovrin codebase into its family of open-source tools and frameworks:
Indy provides tools, libraries, and reusable components for providing digital identities rooted on blockchains or other distributed ledgers so that they are interoperable across administrative domains, applications, and any other silo. -Phillip J. Windley, Ph.D., Chair, Sovrin Foundation
Around the same time, at Conensys 2017, representatives from Microsoft, uPort, Gem, Evernym, Blockstack, and Tierion announced the formation of the Decentralized Identity Foundation (DIF). This industry-wide consortium was created to support the development and interoperability of an open ecosystem for Decentralized Identity.
In July of 2017, the Department of Homeland Security SBIR awarded Evernym $749,000 to “design and implement a decentralized key management system (DKMS) for blockchain technologies” based on NIST Publication A Framework for Designing Key Management Systems. This contract granted as a result of their work on Decentralized Identifiers (DID) since a preliminary funding round in '16.
Throughout 2018, the Sovrin Foundation welcomed 30 new stewards, bringing its total to about 50 institutions, including Aalto University, Cisco, CULedger, Consent Global, Danube Tech, Datum, Digital Bazaar, IBM, iRespond, KYC Chain, lab10 collective, T-Labs, Tykn and Global Consent.
Verifiable Organizations Network
A Production Government Deployment of Hyperledger Indy
Throughout 2018, the Canadian governments of British Columbia and Ontario began their work with Hyperledger Indy and the Sovrin Foundation, founding the Verifiable Organizations Network (VON). They’re using Indy to build a public business registry called “the OrgBook.”
The OrgBook is a “searchable public directory of open verifiable data about organizations legally registered in BC.” The BC Gov currently has 528K active legal entities, with 1.4M Verifiable credentials held and 1675 credentials added this week.
John Jordan of BC Gov, and Stephen Curran of CloudCompass recently gave a presentation of VON at the Hyperledger Global Forum. Their registry of public organizations is a significant step towards creating a decentralized network for self-sovereign identity, enabling individuals to own and control their data — using cryptographic proofs, rather than personally identifiable information, for digital authentication.
Towards the end of 2018, the Ethereum Enterprise Alliance (EEA) released a standard for Enterprise Ethereum implementations. Around the same time the EEA and Hyperledger Foundation joined each other’s organizations, supporting collaboration, interoperability initiatives across the sector, and dispelling any notion of rivalry between the organizations.
Today, Multichain has around 90 partnerships and recently released a 2.0 beta. The EEA has 500+ member organizations, the Hyperledger Foundation and R3 Consortium both have about 300 member organizations each.
Corporations such as MasterCard, IBM, JPMorgan, Bank of America, Accenture, Microsoft, Oracle, HP are working along with these consortiums and organizations of every type across the globe to implement permissioned blockchain solutions.
Its been 5 years since the first attempts to reproduce the benefits of blockchain in a permissioned environment. In addition to any successes that private trials may have had, the work of Canadian governments in the Hyperledger Indy ecosystem, and the public demo of the Verifiable Organization Network is a hopeful sign for the advancement of Self-Sovereign Identity — which just might be permissioned ledger’s killer app.