The growth of blockchain, and the deeper understanding of it potential and possibility, has led to a huge swath of different chains, cryptocurrencies, and, everything in between. However, what this booming market has also spawned is the need for interoperability, as well as standardization.
According to American business and financial services company Moody’s, the drive towards this will only start happening in 2021. The report states that it could result in time and cost savings, automation and faster data availability.
More than that, it is the standardization, according to Moody’s, that will usher in better interoperability, which will then lead to even better operational efficiencies in business and different sectors.
Senior research analyst at Moody’s Frank Cerveny said: “Standardisation of blockchain technology would make its benefits more accessible for securitisations. Standardisation would improve interoperability across systems and market participants, but also reduce counterparty concentration, operational and legal/regulatory risks for transactions that use blockchain technology.”
It seems a bit odd that the prediction for this vital aspect of advancing technology is still a few years away. The idea of interoperability has been spoken about at length, but never really tackled.
Perhaps it has to do with this period of innovation and boundary pushing; people are still siloed and self-interested to be worrying about what their blockchain can do when used with others. However, for the consumers and customers of these future system, there needs to be seamless integration across niches, sectors and infrastructures.
Network restrictions across the current forms of blockchain have left the technology stagnating a bit. It has not allowed for the full deployment of blockchain infrastructure in companies, and even in the decentralized space, has stopped the flow of different currencies without the need for an exchange.
To understand what blockchain interoperability is, one needs to understand why it matters. In the simplest sense, blockchain interoperability is the ability to share information across different blockchain networks, without restrictions.
This is important because use across different networks is what customers are used to. If you take Visa, for instance, is its own payment company with its own cards, yet they are interoperable across ATMs all over the world. If we wanted to do the same thing with Bitcoin, it would not work as Bitcoins transactions cannot be recorded on any other chains.
Therefore, if Moody’s is correct in its view that interoperability will only start coming around in 2021, then it is safe to assume that blockchain will not take off adoption wise for another year and a bit still. Only when these blockchains start to work across technical borders, will there be a real hunger to integrate them.