Interledger Protocol (ILP) makes the smart contracts – blockchain agnostic and adds the feature of neutrality. Interledger Protocol primary design principle has been simplicity. With the ILP, the decentralized app is not tied to a specific blockchain resource. Interledger has solved the problem of relying on a single currency or a proprietary network (like Visa, Mastercard or PayPal) or a single platform (like Apple or Android).

Interledger Protocol is designed on the principles of the Internet. The developers have tried to use all the intrinsic features and properties of the Internet like creating packets, transferring and validating them.

Interledger core protocol was finalized in late 2017. Now we have IPLv4. The earliest version was conceptualized for the trustless exchange of cryptocurrency and for the streaming of micropayments.

Interledger is an open source protocol developed by the W3C Interledger Community Group. There is no Interledger company, currency, or blockchain.

Interledger is made up of a network of connectors between two different types of ledgers (cryptocurrencies, fiat or any other token). The protocol allows a user to transact on the network without moving the assets to the specified blockchain. ILP does not require any central authority or a company. It is not tied to any currency, token or any blockchain. It is an open network of networks which is more resilient, scalable, and feature-rich than any independent network on its own.

With the Interledger Protocol, a user sends bitcoin. His recipient will automatically receive his preferred currency (for example ethereum). The assets are exchanged in the transfer-flow without any interference from anyone. When the user sends BTC, his wallet sends Interledger packets denominated in BTC to a connector. The connector will apply their exchange rate and forward the recipient’s preferred currency (Ethereum in our case) denominated packets on to the receiver.

The route may become complicated and the number of connectors may increase depending on the type of assets. Each used connector in the network is incentivized to help find the best path through the network. The sender does not need to trust the connectors. The protocol guarantees that the sender’s money cannot be lost or stolen in the transit.

At the backend, Interledger routes packets of money across value networks as data packets are sent between the Internet Service Providers.

Key Features of Interledger Open Protocol

The most important features of the Interledger protocol are:

Simple Packet Format

Trustless Sending

Packetizing Value

1. Simple Packet Format

The Interledger Protocol (ILP) works on a resilient system of packet sending between senders, connectors and receivers as the packet and address system (of the Internet).

ILPv4 has three packet types: PREPARE, FULFILL, and REJECT packets. These can be correlated to request, response, and error messages. Connectors forward Prepare packets from senders to receivers. Connectors relay the Fulfill or Reject packets back from the receivers to the senders.

Prepare packets comprises five fields: a destination address, amount, end-to-end data, and a “condition” and expiration that enable the trustless sending. The packet format is a network-agnostic type and the universal ILP address scheme help connectors route packets to the correct receiver.

2. Trustless Sending

This feature enables users to send money through the network of connectors without needing to trust them. Interledger protocol guarantees that the sender’s money cannot be lost or stolen in flight. This is critical for creating an open and competitive network.

The packets in the Interledger can flow in both forward and backward directions. The recipients of the packet are incentivized in which the recipient gets paid before the money ever leaves the sender’s account. Thus it is said to be two-phase commit.

The steps involved in sending are

(a) PREPARE PACKET is to travel from the sender to the receiver. Represent a commitment to pay, if the connector gives a proof of payment to the receiver

(b) FULFILL PACKET is with proof of payment to the receiver. Proof of payment is relayed back to the sender (backwards). The proof of payment is a pre-image of a hash. In case of a packet being misrouted or dropped, the sender will not get the FULFILL, so money will not leave his account.

(c) REJECT PACKET is returned by the receiver if PREPARE PACKET doesn’t fulfil receiver’s check conditions. REJECT PACKET may also be sent if the PREPARE PACKET expires before the FULFILL is returned.

3. Packetizing Value

This feature splits the large transfers into many lower value homogenous packets. Smaller packets increase the efficiency, security and interoperability of the better utilization of money.

Connectors can optimize for speed and throughput because every transaction — from large purchases to streams of micropayments — turns into similarly-sized ILP packets.

ILP embeds the true power of the Internet to connect to everyone. The Internet is not a single network, but a network of networks or internetwork. Packets of information are sent on this network across independent telecommunication providers using open protocols such as TCP/IP. With the same concept, ILP was conceptualized; to have some protocol to send money or value over the network seamlessly independently of the service provider.

Interledger Protocol and Ripple

Very fewer people, except for a few in the industry know that ILP has been a brainchild of Ripple CTO Stefan Thomas and a Ripple Engineer Evan Schwartz. The ILP whitepaper was released in Oct 2015. The Ripple collaborators visualized to enable different ledgers to communicate over a network of connectors using standardized protocols.

Ripple sponsored and created the ILP technology which they shared even with their competitors as a long-term business strategy. ILP connects everything thereby creating an “Internet of Value”, meaning to have the “ability to make sending value as easy as sending information”. With the marriage of ILP and Ripple, XRP Ledger and XRP become a diverse network payment system. Imagination is the limit when XRP ledger is associated with any other ILP enabled network or ledger.

Ripple stumbled on a concept that could transform the entire payment transaction industry.

The stage is set. Every day the technology for Ethereum smart contracts and ripple is maturating. We are talking of millions of transactions per second using these technologies.

The big question is when will these become mainstream technologies like the Internet?

Share this post: on Twitter on Facebook on Google+ on LinkedIn