Article

Blockchain interoperability considerations and approach

Applications for supply chain, global trade, and Industry 4.0

The emergence of blockchain technology holds great promise for supply chain organisations. However, concerns around blockchain interoperability can serve as an obstacle to deployment. The World Economic Forum (Forum) and Deloitte examined the challenges and potential solutions for interoperability in the context of supply chain, global trade and the fourth industrial revolution.

The blockchain interoperability challenge

Through Deloitte’s work with the Forum’s Centre for the Fourth Industrial Revolution and its multistakeholder community on Redesigning Trust: Blockchain for Supply Chains, interoperability has emerged as a primary obstacle that impedes blockchain deployments.

Recognizing that blockchain solutions have been formed around existing, smaller ecosystems and that global trade supply chains may intersect multiple of these ecosystems (see supporting illustrations at the bottom of this page), a number of key questions emerged from the Forum’s multistakeholder community, including:

  • Can blockchains speak to each other?
  • Will a single global blockchain arise as the industry standard?
  • What blockchain platform should organizations use?
  • Why can’t organizations simply enhance their communication protocols to application programmable interfaces?

To address these questions, this paper aims to articulate, in simple terms, important blockchain and distributed ledger technology concepts as they relate to interoperability considerations.

View the full report:
Inclusive Deployment of Blockchain for Supply Chains:
A Framework for Blockchain Interoperability

The blockchain interoperability challenge

Through Deloitte’s work with the Forum’s Centre for the Fourth Industrial Revolution and its multistakeholder community on Redesigning Trust: Blockchain for Supply Chains, interoperability has emerged as a primary obstacle that impedes blockchain deployments.

Recognizing that blockchain solutions have been formed around existing, smaller ecosystems and that global trade supply chains may intersect multiple of these ecosystems (See illustrations at the bottom of this page), a number of key questions emerged from the Forum’s multistakeholder community, including:

  • Can blockchains speak to each other?
  • Will a single global blockchain arise as the industry standard?
  • What blockchain platform should organizations use?
  • Why can’t organizations simply enhance their communication protocols to application programmable interfaces?

To address these questions, this paper aims to articulate, in simple terms, important blockchain and distributed ledger technology concepts as they relate to interoperability considerations.

The blockchain interoperability challenge

Through Deloitte’s work with the Forum’s Centre for the Fourth Industrial Revolution and its multistakeholder community on Redesigning Trust: Blockchain for Supply Chains, interoperability has emerged as a primary obstacle that impedes blockchain deployments.

Recognising that blockchain solutions have been formed around existing, smaller ecosystems and that global trade supply chains may intersect multiple of these ecosystems...

A framework for blockchain interoperability

Read the full report

...a number of key questions emerged from the Forum’s multistakeholder community, including:

  • Can blockchains speak to each other?
  • Will a single global blockchain arise as the industry standard?
  • What blockchain platform should organisations use?
  • Why don't organisations simply implement application programmable interfaces (APIs) to enhance their communication protocols?

To address these questions, this paper aims to articulate, in simple terms, important blockchain and distributed ledger technology concepts as they relate to interoperability considerations.

A framework for blockchain interoperability

Through a framework designed for supply chain decision makers, the paper helps guide decisions that are inclusive, interoperable and with integrity, thus reducing missteps, embedding leading practices, and accelerating the proliferation of responsible blockchain solutions.

The paper is organised into seven sections that together explain the blockchain interoperability challenge and suggest approaches to address the challenge for different scenarios:

I.  Blockchain interoperability – context and definition
Blockchain solutions to date have been formed around existing smaller ecosystems for relatively simple use cases. To realise blockchain’s promising results for global supply chains that intersect with multiple ecosystems and utilise multiple blockchain platforms, interoperability is critical.

II.  Three layers of the blockchain interoperability model
An interoperability model for blockchain solutions should structure requirements across three layers – business model, platform, and infrastructure. The framework provided in the report breaks down the challenges and considerations for each layer.

III.  Interoperability approaches
Three approaches unique to blockchain interoperability exist: Cross-authentication, Oracle, and API gateway. Each approach comes with pros and cons, and their usability depends on the types of systems between which one wishes to achieve interoperability.

IV.  Picking the right approach
To assist organisations in making decisions on the right blockchain interoperability approach, the report introduces a framework that considers solutions based on the types of systems in use and the types of consortia as the business context for interoperability needs.

V.  Current state of interoperability solutions
The interoperability landscape for blockchain-to-blockchain solutions remains immature for enterprise use, whereas API solutions have a higher degree of maturity but may present other challenges. In this section, the report describes the current state of interoperability solutions and their ability to connect the most common blockchain platforms.

VI.  Interoperability case studies
This section details how blockchain interoperability has been achieved in two specific cases and illustrates how the tools presented in the white paper can be applied.

VII.  Checklist for interoperability requirements
A checklist is provided to assist organisations in structuring their efforts to clarify blockchain interoperability requirements in accordance with the interoperability model presented.

This is the seventh white paper in the Redesigning Trust: Blockchain for Supply Chains series and part of a broader project focused on the co-creation of a toolkit to shape the deployment of distributed ledger technology in supply chains.

The majority of executive respondents to Deloitte's 2019 Global Blockchain survey said that blockchain technology has become a critical priority for their organizations and that the focus recently has shifted from ‘will blockchain work?’ to ‘how do we make blockchain work for us?’ Interoperability is a key component to address this challenge.

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