Ripple Insights: Why is Interoperability A Key Factor To Unlock the “Network of Networks”


  • Interoperability will be a key factor to create a network of networks
  • The Interledger Protocol is working on this direction

    James Wallis, the founder of 7e4 LLC, wrote an article for Ripple Insights in which he explains that blockchain has the power to reduce friction and enhance trust between parties. 7e4 LLC provides business advice, analysis, strategic vision and more.

How To Create A Network of Networks

According to Mr. Wallis, creating a blockchain network is not enough in order to use all the potential related to them. Indeed, the truly transformative impact will happen when individual networks come together and form a “network of networks.” This will allow distributed ledger technology to be interconnected and transact one with each other.

In order for the network of networks to become a reality, Walls explains that it is necessary for them to have enough volume to offer value to other blockchains. This is already occurring in different areas and could soon reach many others. Nonetheless, having a large volume is not enough. Indeed, it is necessary to generate interoperability networks and systems, which is not so easy.

Wallis gives the example of a container ship that was sold to another person or party during the voyage and the assets must be moved from one trade finance blockchain to another. This is not going to be easy. This is why is so important to have clear interoperability.

As the author of the article explains, there is one way to resolve this problem, using the Interledger Protocol (ILP) it is possible to allow value to be transferred across networks around the world. In order to operate, it abstracts the differences between these networks in a similar way as to how the Internet Protocol (ILP) allows Ethernet and WiFi compatible. With the ILP, it will be possible to create interconnected experiences that solve more problems and open up new and diverse opportunities.

Mr. Wallis wrote that banks and other financial institutions are struggling to service small and medium businesses since they have high-cost systems that were created to service larger companies and firms. Through interoperable trade finance and payment solutions that use blockchain technology, it would be possible to offer lower cost alternative services for smaller firms and individuals.

About a network of networks, he commented:

“The possibilities of a network of networks are endless but can only get started once we’ve resolved the issue of interoperability. While it’s natural for each individual network to focus on developing its own business case and driving user adoption, ensuring enough attention is given to connecting with others will be the key to not being left behind.”

In addition to it, those banks that are currently working and experimenting with this technology and trying to build an interoperable network of networks will clearly be ahead of others.

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