Over the last two years the blockchain space has evolved at a fevered pitch.  We have seen new business models emerge, new approaches to old problems, and numerous business pivots. We have also seen a number of announcements of early adopters making fantastic progress in vetting and proving the technology in some really great use cases.  One thing for sure is, there is a lot of excitement about this technology, and also some healthy skepticism.  We are definitely seeing some barriers fall, but in all the excitement, we may overlook new barriers that arise as a result of disruptive innovation—including the interoperability challenges of all these new solutions.

On January 27, Cisco joined some of the industry’s most innovative blockchain startups and enterprises in announcing the Blockchain IoT Protocol Initiative.  This consortium is dedicated to ensuring interoperability among multiple blockchains. It represents a major step toward meeting the challenges of deploying blockchain technologies at a global scale in a decentralized and heterogeneous competitive and operating environment that bridges physical real world assets and their digital representation.

Blockchain transactions involve multiple, diverse networks.

A standardized approach to interoperability is needed for blockchain to be effectively used in such an environment. For example, blockchain can take the friction out of supply chain processes, providing traceability and auditability of parts and components throughout the product life cycle—but only if different blockchain networks can talk to each other. A container ship may carry a variety of goods governed by different block chain networks and different “smart contract” solutions. The various ports along the ship’s journey need to have interoperable solutions that record the transactions of offloading the goods from the ship to a truck, and again when final delivery and payment are made. Today, blockchain solutions are being developed so rapidly by so many different parties that without standards, incompatibility is a virtual certainty.

“It is safe to assume that this industry will evolve to have many, many blockchain networks,” Maciej Kranz, Cisco’s vice president, Corporate Strategic Innovations, commented after the announcement. “The ecosystem of workflow specialists and application developers will continue to grow over the coming years. As this evolving network environment becomes even more complex, the Blockchain IoT Protocol Initiative will lead the effort to ensure interoperability.”

Those that have been following the evolution of blockchain technology closely will know that it promises to deliver an immutable operating environment where multiple parties can interact with data objects in a manner that is not only highly secure, but also tamper resistant and tamper evident. Blockchain technology records transactions globally, and can easily observe and identify manipulations, malicious or otherwise. The goal is to increase secure and confidential value flow in order to reduce the complexity of establishing and maintaining trust across multiple parties. This ability will bring about dramatic changes to the auditability, forensics, and real-time operations of workflows that involve a multitude of actors, each with their own administrative domains.

The consortium is about to undertake work to explore how to drive the interoperability of digitized physical assets created in one blockchain solution and transacted or received by a completely different blockchain solution. By addressing the challenges of interoperability, the group aims to identify a common model at the intersection of IoT and blockchain that ensures contiguous resiliency and trust, while at the same time removing potential barriers to adoption.

The newly announced consortium is one of many factors coming together to accelerate the development and adoption of blockchain technology. The journey is starting, and Cisco is excited to be a part of it.