Interoperability: The Next Frontier Of Blockchain Development

ETHNews looks at one of the cryptospace’s buzzwords and what it could mean for the future of the blockchain ecosystem.

If we consider conventional product development, or even enterprise practices in general, companies tend to work in silos. Businesses want to secure their intellectual property and beat competition to the market.

Many blockchain startups have disavowed this mentality and instead decided to open source their code, allowing anybody to build upon their projects, and work together with competing companies despite what traditional business logic dictates. This collaborative culture can be seen at events like San Francisco Blockchain Week, where individuals are more than happy to offer support for other companies’ projects and contribute to the collective pool of talent and resources.

The cryptospace’s culture of collaboration also lends itself to another trend: the pursuit of interoperability. In the barest sense, interoperability refers to networks and systems capable of communicating with each other. Blockchain companies, then, aren’t simply collaborating; they’re trying to create products that are compatible.

Part of the emphasis on interoperability stems from practicality. With the overabundance of cryptocurrencies mined (or forged) on different blockchains, there needs to be a simpler method for cross-chain exchange. Put another way, there needs to be a bridge to connect all the token economies. That is why exchanges exist, but these intermediaries carry risks and defeat the purpose of decentralization.

At an interoperability panel during San Francisco Blockchain Week, Nikil Viswanathan, co-founder and CEO of blockchain intelligence platform Alchemy, acknowledged the ability for exchanges to be hacked (look at Bithumb, a recent target of hacking attempts). He believes that, ultimately, exchanges should be replaced.

Although enabling an (arguably) more secure and decentralized transaction framework is significant, the role of interoperability extends to various use cases. Brian Kerr, co-founder of blockchain company Kava Labs, sees the potential that interoperability has for blockchain-based gaming:

“In an ideal world, I can interoperate my video game items from one game over here, and in the best case, take armor I have in this game and actually use it in a character in a completely different game.”

Kerr also discussed the possibility of using video game items as a means of payment in the analog world, e.g., paying for a Starbucks coffee with World of Warcraft loot.

Another use case for interoperability is within the tipping economy. Many blockchain platforms that enable users to reward content creators with tokens are disparate and require individuals to use each platform’s native coin. An interoperable system, according to Kerr, would enable anybody to tip “with whatever currency is native to them.”

These hypotheticals may seem pie in the sky, but he believes that “with interoperability, we’re going to see a bunch of new use cases that we’ve never seen before.”

Shyft International CEO Bruce Silcoff sees the importance of interoperability through the lens of identity management. Although Shyft works in the realm of data protection and identity verification more broadly, Silcoff believes the company’s blockchain solution can help migrants and refugees take control of their identity.

Silcoff mentioned the example of a man moving from Ireland to Canada. When that individual arrived, he was unable to obtain a credit card because it was as if his credit history did not exist in Canada. “Why isn’t the data interoperable?” Silcoff wondered.

Applied to an example like this, blockchain technology functions as a tool to add interoperability to a presently fractured system. The lack of data coordination that Silcoff described is understandably a nuisance to individuals who lead global lives.

Although Shyft’s work to enable an “interoperable identity,” so to speak, already makes sense as a solution for our globalized world, perhaps the greatest potential emerges through the platform’s ability to support refugees.

Silcoff noted that many Syrian refugees who seek asylum in other countries have fake IDs. Those who do have legitimate identification often sell their documents to others for food, clothing, or shelter. “That’s a problem,” said Silcoff. “We have to fix the identity problem.”

Despite the hopes and good intentions of organizations like Kava Labs and Shyft, interoperability is not the goal for many blockchain companies. At the end of the day, businesses are businesses – they exist to earn profit. Capitalism generally does not reward philanthropy for philanthropy’s sake.

In a different Blockchain Week panel, Thomas Trowbridge of distributed consensus platform Hedera Hashgraph said the company had secured a patent for its technology. He framed this decision in terms of preventing technological forking, but it ultimately represents the standard path that businesses take when creating their products.

Interoperability, then, can still be considered a fringe – or at least a nonstandard – goal. It’s true that a handful of companies are proactively integrating interoperable architecture into their systems, but that behavior may be more an exception rather than a defined trend.

Still, a focus on interoperability does have various benefits, and the point may not be profit. In a space as strange as Blockchain Land, alternative paradigms are the norm.


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