Blockchain interoperability — the interconnecting of multiple networks to allow data and value to flow seamlessly — is often envisioned in the context of consumer applications. Think DEXs adding support for numerous EVM networks, or blockchain bridges linking to the next trendy DeFi ecosystem.
But interoperability has far broader ramifications than allowing traders to jump chains on a whim. In fact, one of the greatest beneficiaries of the maturation of multi-chain interoperability will be enterprises. As enterprise solutions grow across industries, the need to engage with multiple chains rather than exist on a single, isolated blockchain is increasing.
The advantages of connecting to a fully interoperable blockchain ecosystem are many, supporting future-proof solutions that make it easy to migrate from one platform to another while compounding the network effects of a shared business landscape to expand capacity, accessibility and choice for network participants.
What enterprises want
In the past five years, enterprises of all kinds have found use cases for blockchain, ranging from supply chain management to healthcare. While the applications are as diverse as the businesses themselves, their demands are broadly similar. Enterprises using blockchain are essentially doing so in pursuit of greater trust, security, transparency and data traceability. If a blockchain can deliver these qualities in greater measure than a legacy system, adding Web3 benefits to existing solutions is a no-brainer.
Blockchain’s ability to securely automate processes that previously required massive manpower, physical infrastructure and multiple intermediaries means that enterprises can achieve massive boosts to operational efficiency while drastically reducing costs. However, expecting every vendor and supplier to use the same chain as a single organization significantly hinders the likelihood of mass adoption — especially when supplier networks are large and complex.
Cross-chain cooperation
The options for blockchain protocols have increased significantly over the past few years for both private and public chains. Each blockchain comes with its own unique benefits and drawbacks, meaning any enterprise that limits itself to one chain fails to capitalize on the full potential of benefits different blockchain technologies might offer.
For instance, private blockchains are well-suited for protecting intellectual property but are limited by their permissioned nature. Conversely, public chains enable global access and more data points, but users are at the mercy of other entities, which can lead to erratic network costs and bottlenecks.
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The simplest way to envision this is as a series of roads. A factory in the middle of the desert isn’t going to do much business until it’s connected to public highways. It might be able to work wholesale with neighboring manufacturers, but local roads will only carry it so far. Only when it’s connected to the interstate can it start to ship globally.
Multi-chain matters
Enterprises seeking to make use of blockchain aren’t short of options. Public and private solutions such as Quorum, Hyperledger Fabric, Polygon and Ethereum are all readily available and proven (Simba Chain does have an affiliation with both the Hyperledger Foundation and Polygon). However, interoperability between blockchains is essentially non-existent. If a blockchain solution can’t effectively share legacy data or connect with existing on-chain data infrastructure, its value proposition is seriously impaired.
One of the biggest impediments to greater interoperability is the absence of a shared programming language between blockchains. This increases the cost and complexity of creating multi-chain applications.
An interoperable future
Although multi-chain solutions can play a vital role in eliminating barriers to cross-chain functionality, they can’t unilaterally deliver full interoperability. Solving this broader problem calls for efforts from a cross-section of companies operating within the blockchain ecosystem, from the base layer to the application layer. For the past two years, countless dollars and hours have been put into this challenge and the results are starting to appear.
Blockchain bridges are flourishing and are being used for much more than moving tokens. Cross-chain messaging is now routinely being used to trigger smart contracts, query data from third-party applications and resolve events that were initiated on different chains.
Meanwhile, multi-chain applications are being developed that remain unbeholden to any one ecosystem, instead taking their liquidity or data from whichever chain supplies it at the best rate. Because of these innovations, it no longer takes a 100-member developer team to create applications that leverage multi-chain environments. As a result, small to medium-sized enterprises, large corporations and government institutions can tap into this powerful functionality.
Given the diversity of global business, it’s inevitable that enterprises will emerge with blockchain solutions that exist across dozens of private and public chains. It’s equally likely that solutions will emerge that allow these siloed systems to work as one, enabling businesses to create powerful blockchain solutions that aren’t constrained by networks or languages. In short, the future of enterprise blockchain is intertwined with interoperability — and it’s closer than you think.
Bryan Ritchie is CEO of SIMBA Chain, the leading API development platform to help companies transition from Web2 to Web3.
This article was published through Cointelegraph Innovation Circle, a vetted organization of senior executives and experts in the blockchain technology industry who are building the future through the power of connections, collaboration and thought leadership. Opinions expressed do not necessarily reflect those of Cointelegraph.
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