Professional services firm Deloitte recently published an analysis of open source blockchain projects (see The Evolution of Blockchain Technology). It found only 8% of blockchain projects on Github survived the first year; however, the remaining projects represent an exciting area of opportunity, especially for the financial services industry.
Banking and finance may have the most to gain at the moment, but many industries and individuals see tremendous potential in blockchain. Walmart and IBM formed a food safety alliance in China to better track food production and transportation across the globe. Sony and IBM want to bring the transparency and security of the blockchain to higher education. Comcast invested 3.3 million dollars in Blockdaemon, an enterprise software company that simplifies access to open source blockchain technologies like Hyperledger Fabric and Ethereum.
All of these enterprise efforts and more were announced within a few months of one another. Whether or not the buzz surrounding cryptocurrency is deserved, it is clear the underlying technology—blockchain—is likely to enjoy serious consideration for any problem that requires a solution grounded in managing trust.
Our list of open source blockchain front-runners
Our list includes the following open source projects ordered by number of contributors on Github:
Hyperledger: One tent, many shows
Hyperledger is a Linux Foundation umbrella project started in 2015 to support the cross-industry development of blockchain technologies and tool sets. Hyperledger includes several framework projects:
- Fabric: A permissioned blockchain implementation that enables businesses to process transactions at scale in a transparent and trustworthy manner while allowing private data sharing among members. Fabric does not have a cryptocurrency, eliminating the expense of complex computations.
- Sawtooth: A platform for building distributed ledgers. Its consensus algorithm, proof of elapsed time, enables the distributed ledger to operate efficiently at enterprise scale. The integrity of the ledger is maintained in part by transaction families, an approach to contract logic that empowers businesses to balance versatility and risk as needed.
- Burrow: A permissionable smart contract application engine based on the Ethereum Virtual Machine (EVM). The project is young, but it represents an important point of collaboration between Hyperledger and Ethereum.
- Indy: A distributed ledger and utility library for creating and managing identity. An individual’s identity is stored multiple times across many industries and is often shared without a person’s knowledge or explicit consent. The Indy project brings the power of the distributed ledger—a single source of verifiable truth—to individuals and organizations. A privacy by design approach promises to keep the project on the side of empowering the individual while eliminating the expense and risk of identity management for organizations like Equifax (see Federal Trade Commission: The Equifax Breach).
- Iroha: A blockchain implementation, smart contract engine, and utility library primarily aimed at mobile application development.
Ethereum: A programmable world computer
Ethereum is a blockchain application platform. It is a distributed network capable of executing code for a myriad of purposes without the need for a central, coordinating party. Perhaps the project’s most important innovation is its implementation of smart contracts, computer programs that can directly carry out transactions when contractual conditions are met, replacing the need for human intermediaries.
Ethereum’s consensus protocol (the method by which transactions are verified and added to the blockchain) is a mix of proof of work (Bitcoin’s approach) and proof of stake. Proof of work is highly resistant to attack, but it is time consuming, resource intensive, and does not scale well. Proof of stake is an energy efficient alternative to proof of work that has the added benefit of incentivizing validators to protect their own stake in the coin.
Ethereum plans to move completely to proof of stake in the near future.
Bitcoin: The internet is your new banker
Bitcoin is the first popular decentralized digital currency. Its value is secured by scarcity rather than fiat, its reach is borderless, and its exchange is peer-to-peer rather than mediated by financial institutions and governments. Individuals and businesses enjoy lowered costs thanks to the elimination of credit card fees, wire transfer fees, and currency exchange fees.
Any fee currently associated with the movement of fiat currency is a target for Bitcoin’s approach to the transfer of value.
Monero: The strengths of cash without the digital strings
Unlike Bitcoin, Monero is an anonymous, untraceable cryptocurrency. Monero obfuscates the identity and activities of coin holders as well as each coin’s transaction history by employing cryptographic techniques impervious to surveillance (see ring signatures).
The coin is a natural fit for individuals and organizations that want the flexibility of cash without the burdens of traceability (see Vanity Fair, Google is Secretly Monitoring your Real-World Purchases). The coin’s cash-like design also helps it retain value by avoiding the “tainting” problems of traceable cryptocurrencies connected to illegal activities.
IPFS: Making the web more like the internet
InterPlanetary File System (IPFS) is a peer-to-peer distributed file system that enables web users to enjoy the freedom, safety, and speed of the internet. Today web users must access content through increasingly more centralized, slow technologies controlled by corporations and governments that can eliminate access (see New York Times, E.P.A. Scrubs a Climate Website of ‘Climate Change’). The underlying technology that powers the web—the internet—supports many ways of moving bits around the world. IPFS shifts web content distribution from location-based to a content-based peer-to-peer network, removing the need for centralizing servers.
IPFS makes the web more like the internet itself.
Blockstack: Keep your own data
Blockstack is a peer-to-peer application platform that enables web users, web developers, and businesses to enjoy the benefits of decentralized storage, authentication, and identity.
For web users, Blockstack promises seamless access to e-commerce apps, home sharing apps, social media apps, etc. Anything a user can do on the web now can be accomplished with a Blockstack app easily accessed through an existing web browser. The defining difference between the traditional web and the Blockstack powered web is a user’s ability to use web apps without passwords and to store encrypted data locally or in a remote location of the user’s choosing (IPFS, Dropbox, S3, etc.). With Blockstack users no longer need to worry about a company losing or abusing data: power over data is shifted back to the users.
For web developers, Blockstack represents a simpler and less risky development process. Imagine building a web accessible health application without a HIPAA-compliant database or a social media platform without user passwords or OAuth. The Blockstack browser manages read/write permissions to user-stored data.
For businesses, Blockstack removes the expense and legal exposure related to storing user data. No data silos means nothing to hack: with great power comes great responsibility… for the user.
”Blockchains are, in some ways, a way of commoditizing trust” —Vitalik Buterin
The creator of Ethereum succinctly summarized what makes blockchain technology so special. Humanity found a way to replace some of the social trust invested in human intermediaries with trust in mathematics and cryptography.
The open source projects on our list may engender endless ways of doing things better, from making the financial services industry faster and safer to helping web technologies become less parasitic. A few projects we’re excited about include journalism platform Civil, ocean conservation non-profit Plastic Bank, and the LO3 Energy Enexa energy distribution project.
Our list is made up of platforms and tools. Without support for interoperabiliy and data interchange standards, blockchain technology may just become another way to lock people, governments, and businesses into platforms. To learn more about standards development, see our article Organizations Developing Blockchain and Distributed Ledger Standards.