The ability to share information across different blockchain networks is seen as one of the most important steps in the mass adoption and evolution of the blockchain industry.

The term ‘blockchain interoperability’ has been tossed around for some time now, yet the vast majority of projects are still operating in siloes, thereby preventing the industry from reaching its full potential.

Recently, new organisations have sprung up that aim to facilitate interaction between networks and ensure the concept of decentralisation is fully realised.

What is blockchain interoperability?

Blockchain interoperability means the ability to share, see, and access information across different networks without the need for intermediaries.

Currently, blockchain networks operate independently from one another. The Bitcoin blockchain, for instance, operates entirely separately from the Ethereum network.

There are vast numbers of projects out there, all of which have different characteristics – such as the type of transactions, hashing algorithm, or consensus model – and which specialise in a particular area. Some networks are designed for specific groups, organisations, or governmental departments.

None of these networks have knowledge of the information contained on other networks, despite operating in the same industry.

ConsenSys has argued that the ecosystem is currently in danger of ‘Balkanisation’ – becoming a series of unconnected systems operating alongside, but siloed from, each other.

Its research paper warned: “We would be left with a scattered collection of siloed blockchains, each supported by a weak network of nodes and susceptible to attack, manipulation, and centralisation.”

Why is blockchain interoperability important?

The ability of different blockchain networks to interact with each other and share information is regarded as critical to the success of projects and the industry in general.

In fact, interoperability is crucial in any software system – it simply won’t work to its full potential if it can’t work with other software. For example, most mobile apps that allow payments have to interoperate with PayPal.

As IBM fellow and vice president for blockchain technologies Jerry Cuomo recently pointed out: “Interoperability in digital systems is important – period. Blockchain happens to be the latest and greatest recent breakthrough in that, so it applies equally as well.”

Interoperability is thought to be an important precursor to blockchain’s mass adoption because it would hopefully enable smooth information sharing, easier execution of smart contracts, a more user-friendly experience, the opportunity to develop partnerships, and the sharing of solutions.

At the same time, removing the need for intermediaries or third parties would push the industry closer to its goal of decentralisation.

“The concept of decentralisation and blockchain interoperability are closely related,” said Jack Lu, founder and CEO of Wanchain.

“Interoperability is the ability to freely share information across all blockchain networks. In a fully interoperable ecosystem, if a user from another blockchain sends you something on your blockchain, you will be able to easily recognise and interact with it.

“Blockchain projects that want to implement interoperability into their platform want to create an ecosystem that will enable different blockchains to easily communicate with each another without the need for an intermediary – like a centralised exchange.”

Projects focusing on blockchain interoperability

Several projects have launched that aim to encourage and facilitate blockchain interoperability.

One of the most well-known is Cosmos, which aims to act as an ecosystem of blockchains that can scale and interoperate with each other.

The end goal is to create an ‘internet of blockchains’ – a network of blockchains that can communicate with one another in a decentralised way.

The company’s website states: “With Cosmos, blockchains can maintain sovereignty, process transactions quickly, and communicate with other blockchains in the ecosystem, making it optimal for a variety of use cases.”

Other well-known projects include Polkadot, which facilitates transactions and data exchange; Aion, which is working towards integrating artificial intelligence in its consensus model; and Ark, which lets users create new blockchains within minutes.

Moving forward

Interoperability could be a game changer for the blockchain industry, but there are still lots of hurdles to overcome.

Many blockchains continue to move in different directions, are out to compete with one another and don’t have features that would support interconnection.

But as interoperability start-up ventures gain traction, it could help to persuade networks that the seamless exchange of data is crucial to the success of the entire market.