The financial industry is considered the first to be disrupted Blockchain technology, and ConsenSys Quorum Blockchain seems to be the culprit. However, we need to understand that emerging technologies often experience slow adoption. The primary reason is that organizations seek to better understand the technology and how to use it better.
ConsenSys is a Blockchain software technology founded in 2014 by the co-founder of Ethereum Joseph Lubin. It develops decentralized applications and other infrastructure for the Ethereum Blockchain. Some of the applications created by ConsenSys include Metamask, uPort, Gnosis, etc.
J.P. Morgan developed the ConsenSys Quorum chain. It is one of the significant steps towards the common adoption of Blockchain by financial industries. In this post, we shall explore the ConsenSys Quorum Blockchain, its features, and use cases.
The ConsenSys Quorum chain is an enterprise-focused and permissioned Blockchain network specifically built for financial use cases. It is a fork of “GoQuorum,” a lightweight of geth designed to leverage the R&D inside the Ethereum community. “Geth” is a public Ethereum client. It has lots of protocol-level enhancements created to support business needs. The goal of this Blockchain is to create an enterprise Ethereum client that empowers businesses to adopt and leverage the benefits of Blockchain technology.
We can also see ConsenSys Quorum as Ethereum-based decentralized ledger technology. It offers a permissioned way to apply the Ethereum network to support the privacy of contracts. The ConsenSys Quorum chain like Ethereum but with minor differences. It differs from Ethereum in:
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The ConsenSys Quorum chain is designed to be permissioned. It means that all the networks using Quorum will not be open to all, unlike Ethereum. Therefore, permissioned Blockchain networks operate differently. There are completely different expectations of trust between approved nodes in the network compared to permissionless ones.
In other words, the ConsenSys Quorum Blockchain system is a consortium Blockchain. It is only implemented between participants that have been pre-approved by a designated authority. Although consortium Blockchain systems run in the same manner and with the same features and protocols of a normal Blockchain, it relies only on permitted nodes. The implication is that organizations can consider the feasibility of Blockchain technology without the possibility of failure.
Financial institutions have always prioritized the confidentiality of records. This is one of the issues that regular Blockchain systems like Ethereum failed to resolve. When it comes to corporations and industries, the pseudonymous nature of the transaction can be easily undermined. Aside from its permissioned nature, the ConsenSys Quorum chain further improves privacy by integrating private and public on-chain transactions.
While the public transactions function like that of Ethereum, the private transactions are verified. However, the details of the private transactions are not disclosed. With the use of a system known as Constellation, ConsenSys Quorum is able to manage much of its secure message transfers. In simple terms, Constellation is a general-purpose mechanism that is not entirely Blockchain-related. The ConsenSys Quorum chain owes its superior speed to Constellation and the architecture it supports.
Aside from the privacy in transactions, it also offers privacy for smart contracts. Smart contracts are something banks and other financial institutions are wary of exposing due to security reasons. These smart contracts could contain sensitive information like investment strategies, transaction data, or internal information. In addition, ConsenSys Quorum has been partnering with Zcash to integrate the zero-knowledge security layer (ZSL) into the ConsenSys Quorum protocol. Both of them have released a proof-of-concept technical design document detailing the project.
Its consensus mechanism is called the ConsenSys QuorumChain. It is initiated inside the genesis block. The ConsenSys QuorumChain is a simple, straightforward majority voting protocol. The fact that consortium chains are permission means there is no need to have an expensive PoW mechanism. However, ConsenSys QuorumChain offers different consensus mechanisms suitable for private Blockchain networks. These mechanisms include the following:
RAFT achieves consensus through an elected leader. The leader is saddled with the responsibility of executing log replication to the followers. In this form of consensus mechanism, the leader can decide on placing new entries and establishment of data flow to other servers without consulting those servers. The leader continues to lead until it fails or disconnects, and then a new leader is elected.
Since this is a Byzantine fault tolerance algorithm is based on the Practical Byzantine Fault-tolerant (PBFT) consensus algorithm, the PBFT supports immediate transaction finality and provides liveness and safety under the standard Byzantine fault threshold assumptions.
This is a Proof-of-Authority (PoA) consensus algorithm. It is readily available with “geth,” the Go Ethereum client.
There are many use cases of the ConsenSys Quorum Blockchain. It is used but not limited to healthcare, identity, payments, property, capital markets, etc. Here is a list of some of the projects and brief descriptions:
It is a distributed ledger developed by HIS Markit. The project helps you to keep track of all cash movements.
This project is designed to promote the immediate settlement of transactions. The transactions are basically between clients of the financial institution’s wholesale payment business.
This is a decentralized marketplace where people come to seek access to loans. StreamSource develops the platform.
The project allows its member banks to exchange information at the same time in order to verify payments.
The ConsenSys Quorum system has a lot of tools that help to improve both user and developer experience. These tools are mainly made up of network management, deploying and monitoring utilities, and others. The tools include ConsenSys Quorum support in truffle, Blockchain explorer for ConsenSys Quorum by Web3 labs, Cakeshop. Also, this Blockchain is available on cloud platforms like Azure and Kaleido. There is also the reporting tool that provides convenient APIs that help to generate reports concerning contracts deployed to a particular network. Some third-party tools like Splunk and Prometheus are also very useful in the deployment of the ConsenSys Quorum Blockchain network.
The ConsenSys Quorum Blockchain offers an enterprise-grade Blockchain network with high performance and privacy. Myriads of features made this chain an excellent choice for enterprise use cases. At the moment, ConsenSys Quorum appears to be a great idea and approach that can revolutionize the financial industry. The acquisition of Quorum by ConsenSys is great news to the enterprise Blockchain community. It also reinforces the impact of Blockchain in the financial industry.