Ethereum vs Hyperledger: Similarities and Differences

Date:

July 2, 2018

Ethereum vs Hyperledger

As the adoption of blockchain grows, new technologies that allow to develop distributed databases, process transactions and create decentralized applications appear more frequently. One of the newer players on the market is Hyperledger Fabric which belongs to a group of a project under Hyperledger umbrella. This technology has several distinctions compared to the big brother of decentralized computing, that is, Ethereum.

Fabric and Ethereum are two most common blockchain technologies but they have very distinct differences between them and as a result, they can be used for completely different types of applications. Here are the most fundamental differences that define the scalability and usability of these two technologies:

PURPOSE

Ethereum is the second most developed blockchain in the world, and it is similar to Bitcoin in its strive to remain public and transparent yet it negatively affects its performance scalability and efficiency in the use of resources. Hyperledger Fabric is aimed towards enterprises who would like to build their own blockchains and exchange data and transactions in a secure, private environment.

BUSINESS USES

The fabric is designed with a heavily regulated industry in mind. While world’s biggest decentralized app network is gearing towards general public which can use its smart contract and public ledger in a variety of applications, Fabric can be twisted to suit more strict requirements of financial and insurance industries. Companies who process a lot of transactions welcome the fact that transaction fees are not pain in Fabric blockchain, whereas transaction fees on Ether platform are paid in gas and are funded by tokens.

LANGUAGE

Ethereum smart contracts are usually written in Solidity language which is unique. Chain code (essentially the same smart contracts on Fabric) are programmed in Golang language.

ARCHITECTURE

Ethereum is an open-source ecosystem which prides its complete transparency, decentralization, and immutable nature of transactions. It cannot be customized for a specific mode of operation, rather than a business has to adapt its processes to benefit from its blockchain. But the rewards are numerous. On the other hand, Fabric is comprised of many building blocks which can be interconnected similar to Lego and form a platform that has exactly the features that a business needs, without exhausting resources for features that are not essential. If Ethereum’s approach to applications is more like “take it or leave it”, Hyperledger has a more pragmatic approach: “Take what you want and build what you need.” This could explain why Hyperledger technology is becoming a favorite among businesses who want to incorporate blockchain principles in their technological stack but are not ready to take a full-fledged leap towards Ethereum.

PRIVACY

The fabric was designed as a private blockchain based on strict permissions, while Ethereum is open to anyone, so each member can write and read information on it. Its transactions are visible to all network members by the original concert, while Fabric allows transactions to remain visible only to the parties involved. All participants on Fabric should pass the registration or enrolment process that has to be supervised by the central authority of the organization which is the main attribute of its scalability and privacy.

CONSENSUS

Ethereum miners rely on Proof of Work (PoW) algorithm which is very energy-consuming. To solve this problem, Ethereum plans to shift towards Proof of Stake algorithm in the release of Casper by the end of 2018. Hyperledger Fabric is more flexible in its approach to consensus and allows the user to choose Practical Byzantine Fault Tolerance algorithm where parties must agree only on one point to be used as a point of reference or to bypass the need for consensus whatsoever.

CRYPTOCURRENCY

World’s second most popular crypto coin has a crypto token, Ether (ETH), that can be used inside the platform to process transactions and also traded outside the platform. This is a feature that many ICOs are welcoming for their crowdfunding needs because they can create their own coins using Ethereum’s CoinAPI. But projects that do not require a token can find this feature too cumbersome to implement. Hyperledger does not require a token to function but can accommodate smart contracts which are called differently but are essentially the same pieces of code that can execute themselves on the blockchain platform.

Ethereum and Hyperledger are similar in the way that both are blockchain technologies with endless business and social uses. Fabric is better suited for applications that should not be accessed by the public so that the trading is done between businesses. Ethereum is open and transparent, with its own coin that grows in value, so it’s ideally suited for applications targeting the consumer and commercial business cases.