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The use of blockchain technology in the financial sector remains the most prominent, and with great results. While blockchain has increased in prominence, it is yet to gain the confidence that conventional finance already has. Financial institutions have been slow to adopt the use of blockchain technology into their functions. This is why Quorum was developed, to aid them in their transition into blockchain.
JPMorgan developed quorum in partnership with Microsoft. The role of Microsoft in this project is to provide cloud storage and distribution of Quorum. It is based on the Ethereum blockchain base code Go Ethereum, and they function in similar ways. There are several significant differences, though, which are highlighted by the features of Quorum.
Features of Quorum Blockchain
Quorum functions quite similarly to Ethereum. However, there are significant differences. For one, Ethereum is a public blockchain and grants open access to all, unlike Quorum. Some of its features include:
This is one of Quorum’s essential features because it means that the blockchain solution is not accessible. Parties that are validated and have appropriate permissions are the only ones that can access its network at any given time. Additionally, the transactions are carried out by a select number of participants already approved by a chosen authority. This factor negates the fear by financial institutions of open access to ledgers and records of transactions.
- Improved Privacy
Protection of data is a primary concern for banks since their systems are centralized and vulnerable to hacking. To mitigate this concern, Quorum provides for enhanced privacy for contracts and transactions. Quorum’s permissions concept makes it superior to other blockchains like Ethereum, where no permission is needed to access records. Quorum allows for both public and private transactions on its blockchain. Public transactions are open, similar to other blockchains, and can be accessed freely.
Private transactions are confidential and are not exposed to the public, which is more favorable for banks. The authenticity and verifiability of these private transactions are not compromised because of the Constellation feature. It secures all private transactions, past and present, which can be verified easily by permission individuals. Smart contracts are also protected since they contain sensitive information about the participants and investment strategies.
Unlike any other blockchain, Quorum functions on a consensus using a mechanism called QuorumChain. This mechanism operates straightforwardly based on a simple majority voting system. It uses a smart contract initiated from the genesis block. The contract assigns voting rights to various nodes and tracks their status. Every Quorum transaction involves a global transaction hash, a public state root hash, and the blocker’s signature. The voting protocol relegates authority and power evenly as opposed to a single authority.
- Improved Performance
Quorum has more superior speeds in transactions compared to blockchains like Bitcoin and Ethereum. It is claimed to carry out hundreds of transactions per second, making it perfect for fast-paced financial transactions. These speedy transactions can be attributed to its simple voting protocol. The procedure is simplistic, using smart contracts with smaller nodes of nodes instead of the vast networks used by Bitcoin’s likes.
Quorum as an Enterprise Solution
Blockchain has become essential for businesses that want to issue digital assets and streamline their business processes. It is not essential for all businesses, but it is an excellent enterprising tool for the following reasons:
- Efficient data processing
The decentralized nature of blockchain technology facilitates efficient data coordination as opposed to centralized systems. Quorum allows for this processing and at a faster speed than other blockchains.
- Secure transactions and networks
Blockchain technology is secure because of its decentralized nature, thus making it invulnerable to hacking and tampering. Businesses need to protect their data and networks from outside interference through blockchains like Quorum and Ethereum. They can choose which platform to use based on whether their transactions are public or private.
- Management of digital assets
Blockchain allows an entity to create, manage, and distribute digital assets without going through a third party. This gives the owner autonomy over how to manage their assets.
Architectural Components of Quorum
The three main components of Quorum are:
- Quorum Node (Modified Geth Client)
Quorum node allows the blockchain to take advantage of any developments in the Ethereum platform without compromising its functioning. The peer to peer layer is modified to allow for permission access only. This differs from Ethereum because records there are available to the public.
- Constellation-Transaction Manager
This node is responsible for the privacy of Quorum Transactions. It stores encrypted transaction data and allows designated individuals to access them. It, however, does not have access to sensitive private keys.
The enclave and transaction manager work in concert to enhance the privacy of transactions in the Quorum blockchain. It generates encryption and decryption keys for transaction data, especially private transactions.
Quorum vs. Hyperledger vs. Corda
Quorum, Hyperledger, and Corda are three of the most significant blockchain solutions for business owners. The question in the mind of a business owner is which of these three blockchains to use. While they are all developed from Ethereum’s base code, they are very different.
It is an open-sourced blockchain created for cross-industry blockchain technology. The Linux Foundation hosts Hyperledger, but it is a collaborative effort from various industries. These include leaders in banking, finance, the internet of things, technology, and supply chains.
This is a distributed ledger technology that allows businesses to keep shared ledgers of transactions without a third party. Corda allows strict confidence in transactions, with only the parties involved knowing the details. The other members of the ledger can, however, access these records as well when needed.
The choice between Quorum, Corda, or Hyperledger is dependent on four factors:
- Participation of Peers
All three blockchains are permissioned in nature. Therefore, access is restricted. Only people with special permissions can access the records and are chosen by a designated authority.
In Hyperledger, consensus involves the entirety of a transaction from its inception to its commitment to the ledger.
In Corda, a third party known as ‘Notaries’ validates transactions made before committing to the ledger. These notaries can be centralized or distributed.
For Quorum, the QuorumChain works by a simple majority voting system. A few nodes are assigned voting rights, and their status is verified from time to time. These nodes are the only ones that verify transactions on the chain.
- Smart Contracts
Hyperledger uses ‘chaincode’ for its smart contracts technology. It takes advantage of blockchain’s built-in trust and consensus. It also allows one to write the language in any standard programming language.
Institutions like banks prefer Corda because its smart contract code is also embedded with legal prose. This helps to ensure the validity and legality of the transactions on its chain.
Quorum uses the smart contracts by Ethereum, with specific nodes assigned for public and private transactions, respectively.
- Built-in currency
Quorum and Corda do not support any currencies at the moment. Hyperledger does support tokens, and a native currency can be developed using Chaincode.
Quorum Use Cases
- Vaccination tracing
One of the notable roles of Quorum is to hold records that are only accessible to various individuals. A team in Nigeria with the UN has come up with a way to use Quorum to create a secure database for vaccinations with blockTEST. This database shows records of children that have or are yet to have vaccinations.
- Supply Chain Tracking
Various industries and businesses are using Quorum to track the supply of their products. For instance, Starbucks uses the Microsoft feature, Azure, to track coffee production in various parts.
The quorum may be the way that conventional financial institutions adopt blockchain technology into their operations. It addresses their need for data privacy while incorporating speedy transactions. Its permissions feature is especially attractive for conventional institutions. It ensures that the data on private contracts and transactions are well protected and only accessible to the necessary people. Innovation will lead to more convenient solutions, but Quorum is a good start.