Commentary

Will Loopchain connect to ICON?

It’s pretty clear that ICON is the absolutely dominant blockchain platform of Korea with deep ties to the government, and business deals with the largest corporations and consortiums in major industries. It also looks ready to begin expansion on the global stage (e.g., United States, Japan).

However, you may have noticed that many of the initiatives and facts above seem to relate to Loopchain, ICON’s private, enterprise version. And you wouldn’t be wrong.

While I have clearly stated above that the ICON team can be considered one and the same as the team of theloop, and that loopchain will eventually connect to its public chain ICON through the use of the ICON Nexus via ICON ICX tokens, let me clarify why all these private blockchains would want to interoperate (i.e., connect to the ICON network) in the first place.

Here’s Min Kim, speaking at the interoperability panel at AIONEX in May:

‘Chain ID (is a project) in which 25 securities firms decided to share and create a blockchain just for these firms. However, we also have blockchains in the healthcare side, university side, and we’re in the process of linking these blockchains together. There are other consortiums that are very interested in using the ID data that are stored in the 25 securities firms blockchain. This is not something that… we thought of, it is a natural progression to where things are going. As a company we are pretty much delivering on what the market is demanding at this point.’

This is Min stating that the demand of these private loopchain blockchains to interoperate with each other was a ‘natural progression’ that arose within the company themselves.

In other words, the companies utilizing loopchain are the ones who requested interoperability. The public network ICON, which will connect all loopchain networks and more, was created out of demand and necessity as companies understood the value in sharing data in a public network.

So yes, it’s safe to assume that loopchain networks will utilize the ICON public chain, and along with it, the ICON Nexus and ICX tokens.

How Loopchain will Connect to ICON: A Chain ID Case Study

Let’s look into a case study of how these loopchain networks may interoperate. The ID authentication project, Chain ID, is one of ICON’s most important and advanced projects, as evidenced by its adoption by top financial securities firms (capital markets consortium), a sector in which KYC and AML laws are arguably the most stringent.

When Chain ID connects to the public ICON Network via the ICON Nexus through the use of ICX tokens, and interoperability is enabled, Chain ID immediately expands its use case and scope to almost every imaginable interaction. Our personal identity is at the core of every interaction we make, whether we’re visiting a hospital, making an insurance claim, checking into work, or shopping online. This means that to enable a seamless experience in which these interactions are linked to our identity, the Chain ID loopchain network needs to be connected to the loopchain networks of all the relevant industries and that’s what ICON enables.

Here’s how this plays out in real life. Imagine that a student requires surgery. She may check into a hospital, verify her identity on Chain ID and give permission so that the hospital can share her medical records directly with her insurance company. This will trigger a smart contract that will immediately transfer her health records and her surgeon’s medical certificate (signed digitally on ICON’s Chain Sign) to the insurance company. The insurance company can then immediately process the insurance claim as both the health records and the medical certificate are tamper-proof on the blockchain and do not require additional verification or the sending of official paper documents, steps which typically slow down the process of traditional insurance claims and make them more costly.

After her surgery, the student who needs to get hospitalized for a few days may then give permission to the hospital to share her records with her university so that she can get formally excused from attending classes. The information would again be shared immediately via a smart contract without the need of a third party ‘messenger’, without the need for paper (e.g., a doctor’s note), and with full assurance for both parties that the information is legitimate.

Thus, the use of Chain ID, Chain Sign, powered by smart contracts executing on the ICON network, enables information sharing within industries to become safer, faster, tamper-proof, and cheaper. This means that ICON isn’t just enabling connectivity between loopchain networks, but a more efficient connectivity.

It should be noted that this scenario is theoretically possible on any smart contract blockchain protocol. However, the reason why it’s a uniquely plausible scenario for ICON currently is because ICON is one of the only platforms that have already secured and built the networks in the necessary industries (e.g., healthcare, banking, insurance). Building a blockchain can be as easy as copying and pasting code, the true challenge is building a network.

Interoperability Beyond ICON

For the most part, we’ve been focusing on interoperability within ICON’s network. But what makes ICON special is that their interoperability protocol enables connections with protocols that are not of its own. This is to say that ICON will be able to connect with other blockchain protocols like Bitcoin, Ethereum, or NEO and so on.

As the blockchain landscape matures with almost an over-saturation of blockchain protocols, it’s becoming abundantly clear that there will be no one-blockchain-to-rule-them-all. And insofar as you accept that multiple protocols will always exist, you must accept that interoperability will be a critical factor in blockchain adoption.

Just like the intranets of the past were collectively connected and expanded on by the internet, we can expect stand-alone protocols like Bitcoin, Ethereum, and NEO to be collectively connected and expanded on by interoperability protocols like ICON.

‘Networks of Networks’

Thus, when we consider the fact that ICON’s interoperability features expand beyond its own blockchain protocol to communicating with those that were built to be stand-alone protocols, we can understand how immensely expansive and encompassing the ICON network has the potential to be beyond the interoperability of loopchain networks that have been described so far.

ICON’s Real World Focus

ICON currently has contractual agreements with the largest corporations of major industries for real world use cases of blockchain. This can’t be stressed enough. The only way we’ll see blockchain become useful beyond the world of crypto enthusiasts (e.g., crypto-kitties, and master nodes) and bridge the gap of mainstream adoption is through its use in the real world, and more specifically, real world adoption by corporations, and ICON seems to be leading this initiative.

Once corporations adopt the technology, consumer adoption will follow. This is especially true for a country like Korea, the most wired country in the world, in which a handful of large corporations dominate the technology/software landscape (e.g., Naver handling 74.7% of all web searches, Kakao messenger used by 93% of all smartphone users etc.) In a landscape like this, choices are limited, and using what everyone else does is not just more convenient, but almost essential.

However, we’re still far from mainstream adoption. The fact that the majority of us are having discussions about different consensus algorithms, and transactions per second is proof that these are still early days. When the majority of crypto-users stop having these discussions except for a select few, we’ll know we’ve hit peak mainstream adoption.

That’s not to say that technical discussions don’t matter. It’s true that in its current state, even major platforms like Ethereum require more scalability, but minor differences in tech should not be the core focus or selling point of a project especially since a) blockchain technology still hasn’t been adopted on a meaningful global scale, b) most of blockchain technology is open source. And within any open source environment, companies and projects learn from each other as codes are published freely online. The technology will ultimately follow. The more difficult and important task is educating companies, lowering barriers to entry and building an expansive network that corporations and people will find beneficial to join. That is ultimately what will bring real mainstream adoption. Here is Minho Kim, Council Member of ICON, making this point in an interview back in September:

‘Do you care today if mobile companies use GSM or CDMA? (If you don’t know what these are, you prove his point.) We don’t care. Do you care about the technology behind the Mastercard network? You never ask those kinds of questions… why ask them about the blockchain? Everyone uses WhatsApp and WeChat… The matter of fact is that you mainly use those apps because your friends are on it. That’s the power of the network. The value of blockchain is in the network itself. The network increases with the number of participants. The more participants you have… the more friends are on WeChat, the bigger the value it is for you.”

At the end, Kim refers to adoption occurring with ‘the more participants you have.’ And this is precisely the approach that ICON is taking: enticing corporations to join ICON’s network. Because every time you see an announcement of an MOU between theloop and Company X, you are seeing a new addition to the ICON network. And every addition makes the network more valuable. The sum total of the network value will always be more valuable than any single company within. Even if Company X is Samsung.

If you agree with Kim that ‘the value of blockchain is in the network itself,’ you may see why ICON has gone beyond any other project in realizing this vision.

for part 2 click here.