The World Economic Forum and Deloitte published a white paper exploring how different blockchains can interact with each other to date.
Over the past few years, Blockchain technology integration has increased within a wide number of industries. As such, there are now hundreds of diverse blockchain networks in operation all over the world. For the most part, however, most of these Blockchains are not able to communicate with each other in a way that provides efficient use for enterprise solutions. According to the World Economic Forum (WEF), the current level of blockchain interoperability is still too low for such implementations.
On April 9, the WEF published a white paper on blockchain interoperability as part of its wider investigation into blockchain deployment for supply chains. Written in collaboration with the Big Four accounting firm, Deloitte, the paper highlights the need for interoperability, and explores the extent to which different blockchains can interact with each other in their present states.
Interoperability for private Blockchain networks remains immature
According to the WEF’s findings, the blockchain interoperability problem has been primarily addressed in the context of public blockchains. Private, or so-called permissioned blockchains, have been purportedly left aside as a result.
In the report, the WEF outlined that most interoperability solutions focus on two major public blockchains — Bitcoin (BTC) and Ethereum (ETH) — while sparse development activity has been observed as it relates to permissioned blockchain platforms.
The WEF wrote:
“In public blockchains, interoperability has been in development for many years – for instance, cross-chain, sidechains, proxy tokens, etc. However, a bigger challenge and, at the same time, a much bigger opportunity exists given interoperability among enterprise-grade permissioned blockchains.”
The WEF emphasized that the current interoperability level for blockchain-to-blockchain solutions “remains immature for enterprise use.”
In the report, the WEF and Deloitte mentioned several blockchain platforms and tech firms focused on interoperability issues, including major industry projects like Cosmos and Polkadot. However, the foundation still pointed out that relay interoperability systems like both Cosmos and Polkadot have been used only for permissionless blockchains. They state that “none has succeeded in creating interoperability for blockchain platforms other than Bitcoin and Ethereum.”
Documented interoperability between individual blockchain technologies or interoperability solutions. Source: WEF
The organization also outlined that Hedera Hashgraph’s blockchain network, Hedera Consensus Service, which launched in February 2020, “appears promising for blockchain-to-blockchain interoperability.” The WEF noted that the platform provides the opportunity to introduce a cost-effective and efficient ordering service to any Hyperledger Fabric network.
Additionally, the WEF evaluated blockchain interoperability work by global tech giants. According to the organization, Microsoft is the only industry titan to launch blockchain interoperability solutions so far among large technology vendors like IBM, SAP, and ORACLE. Specifically, the WEF referred to Microsoft’s partnership with Nasdaq to create a solution for the Nasdaq Financial Framework. This framework enables users to deploy different blockchains through one common interface.
Without blockchain interoperability, there will be no mass adoption
As reported by Cointelegraph in late 2019, blockchain networks are remaining largely isolated so far, despite a number of projects actively working on blockchain interoperability solutions.
In November 2019, Joseph Lubin, co-founder of Ethereum and founder of Consensys, expressed hope that China’s much-anticipated Central Bank Digital Currency would allow for interoperability with public permissionless blockchains, including Ethereum.