LAS VEGAS -- Treasury and finance professionals have heard a lot about blockchain and distributed ledgers in the past several years. But without interoperability, the technology will never truly break through, a panel of experts explained Tuesday morning at Money 2020.
Moderator Marc Hochstein, managing editor for CoinDesk, asked the panel how interoperability will be achieved. “If everyone is off doing their own thing, we end up back to square one,” he said. “What is the path to interoperability? How do we get there?”
David Huseby, security maven for Hyperledger, noted that his organization is an open source, collaborative effort with the goal of advancing blockchain technologies across industries. “We have a lot of people from across the blockchain space coming to us,” he said. “We are actively searching the solution space, we’re trying everything, and we’re not saying ‘No’ to anything. We’re already seeing spontaneous collaboration between our projects.”
One key effort that Hyperledger is involved in is the Decentralized Identity Foundation, a consortium formed with the goal of promoting interoperability and standards for blockchain-based identity systems. Microsoft and IBM are also part of this effort.
Looking forward, Huseby expects to see a lot of “spontaneous interoperability” between platforms. “I think people will see value in the ability to move their assets that they have stored on a blockchain to another platform,” he said. “By spontaneous, I mean that we all see the value in developing some standards. We’re developing the things that we need now; I think a lot of it is around identity.”
Although there have been many collaborative efforts within the blockchain community, true interoperability will only be achieved if blockchain platforms can interact with or replace the systems that are already in place. “We have ERP systems, we have CRM systems, we have tons of different types of systems that vary across industry,” said Marley Gray, principal program manager, Azure Blockchain Engineering, Microsoft. He stressed that interoperability patterns are needed to integrate blockchain platforms with legacy systems, and with each other.
However, Todd McDonald, co-founder and head of partnerships for R3, countered that while interoperability is certainly ideal, it might be too soon to be thinking about it. “I love interoperability, but it’s a bit strange that we’re focusing on interoperability before anything is even live,” he said. But in the near term, he sees integration of blockchain platforms with existing systems as the most immediate concern in terms of interoperability.
Amber Baldet, executive director, blockchain program lead, J.P. Morgan Chase, likened the interoperability problem to the early days of the internet, if AOL and CompuServe had been unable to send emails to each other. “They don’t quite speak the same language yet, and if everyone in the world were to adopt one or the other, then we wouldn’t necessarily have a problem. But as of right now, that’s not happening,” she said.
Baldet added that he barriers to total interoperability are threefold. “You have the interoperability with existing systems, you have interoperability between chains of the same type, and then you have completely different blockchain communication,” she said. “It’s a little bit different than saying, ‘Just throw an API in the middle of it and call it a day.’
For example, preventing doublespend—making sure that a transaction only happens once—has proven to be really challenging. “When you integrate with a legacy system and you might have to say, ‘Send a SWIFT message from here and get a receipt back and just tell the blockchain that it happened,’” Baldet said. “But if we can trust that information already, you wouldn’t necessarily have to keep doing some of this work.”
For further insights on blockchain, be sure to check out the AFP MindShift Whitepaper, Emerging Technologies in the Finance Function.