Network of networks: Enabling the blockchain economy

Jerry Cuomo,
VP, IBM

By now, most of you have heard about blockchain and its impact on business networks. As we speak, we see that it is disrupting industries and enhancing the way businesses work together. For example, a blockchain food trust solution is directly connecting participants through a permissioned, permanent and shared record of food origin details, processing data, shipping information and more. One major benefit of this solution is the ability to trace food sources in a matter of seconds, not days — helping to reduce outbreaks of food borne illnesses. Impressive!Currently, there exists 100+ live blockchain solutions in production today. A “live blockchain solution” is a blockchain network with multiple members, adding blocks and/or exchanging value on a daily basis.

Although these blockchain solutions are each producing value for the participants, they are isolated. If individual blockchain solutions remain isolated, it begs the question, how many will there be? How many applications/solutions will an organization need to engage with for all the networks they are part of? But, what if individual blockchain solutions could interoperate? Might they produce even more value if connected together?

Technology-enabled networks

Let’s look beyond today’s implementations. Let us look to a future where blockchain technologies enable a network of networks, creating additional value and further reimagining the way economies, governments, corporations and more work together — the blockchain economy.

Let me define what I mean by a network of networks. An organizations blockchain network actually represents a ”web” of interconnected networks. This architecture would allow an organization to connect and transact with multiple solutions, unbounding them to a single network, and open up a market of interoperability across solutions. Essentially, an organization could have one application or entry point and one peer (ledger), instead of multiple, to engage with every network and solution that is relevant to their business.

To put the potential impact of a blockchain network of networks in perspective, let’s take a look at an example. Let’s use a fictional company called Global Produce Supply (GPS). GPS is a produce distribution and wholesale business. In order for GPS to be successful with end customers and partners, they must ensure the safety and quality of produce, streamlined shipping/distribution processes, and make and receive timely payments with partners. To help meet these expectations, GPS joined three different blockchain networks — one for food quality and safety, one for shipping, and one for trade financing. Each of these blockchain solutions are individually bringing value to GPS; however, they are disparate and do not have the capability to interoperate. Or do they? Now, think about the value of connecting and interoperating these networks, forming GPS’s network of networks. They could use one solution (made up of all three) to ensure the quality and safety of produce; bring accountability, traceability, and transparency to the associated shipment process; and use the trade finance network to conduct financial transactions with partners. This will add an additional layer of value on top of the existing value already created by blockchain. Today, individual blockchain solutions are changing industries in unprecedented ways; however, when blockchain networks and solutions begin to interoperate, additional value beyond the capabilities of today’s networks can be unleashed.

Finding the right networks

In fact, on September 14, 2018, IBM and HACERA took one of the first, but necessary, steps towards achieving this objective. IBM joined HACERA’s Unbounded Registry, which serves as a sort of “yellow pages” directory, enabling companies to discover and participate in existing blockchain networks and solutions. Available networks and solutions listed in the registry are built on a variety of blockchain frameworks, including The Linux Foundation’s Hyperledger Fabric, Ethereum Quorum, R3 Corda, Stellar and more. The registry continues to add to its growing base of participants, including vendors such as IBM, Oracle, Microsoft and consortiums and developers from all around the globe. We are so happy that the Unbounded Registry is helping more participants to collaborate openly, through permissioned and non-permissioned blockchains. We keep encouraging blockchain participants to join, get listed and collaborate using the Unbounded Network.

The next step in this process is to continue unlocking the power of existing blockchain technologies and begin to interconnect or layer them in a multi-lingual manner. To maximize value from blockchain solutions, each organization should look to how individual blockchain solutions can be interconnected. Fortunately, we don’t have to reinvent the wheel and the future is closer than most people realize.

Bridging the gaps between networks

Let’s take a look at how this is possible with blockchain technology today, more specifically, let’s look at Hyperledger Fabric based networks. We think the peer and channel components of a Fabric network is where the true power of a network of networks can be realized. The peer is where distributed ledgers reside, and channels are private sub-networks between members. By unlocking the power of the peer, organizations can use their peer to connect into multiple blockchain networks via channels. This significantly reduces the complexity and optimizes an organizations interaction with different blockchain networks.

In addition to the power of the Fabric peer, we can now begin embedding multi-lingual smart contract capabilities in existing blockchain technologies. More specifically, there are blockchain frameworks with modular architectures, which enable the ability to support a wide variety of languages to write smart contracts in. For example, networks built on Hyperledger Fabric have the ability to use Ethereum (EVM/Solidity) smart contracts. Therefore, a solution containing smart contracts written in Solidity can be available to users of these networks. These capabilities should continue to evolve, especially after the partnership announcement of Hyperledger and the Enterprise Ethereum Alliance on October 1, 2018. This is a major step forward for the blockchain community.

Let’s talk for a moment about the value of Hyperledger/EEA partnership and the value it can bring to technologies like Fabric and EVM. The partnership between Hyperledger and EEA is designed to help establish standards across the projects, enabling integration and interoperability between solutions. More specifically, we are most excited because there is a wealth of smart contracts that were developed to run on the Ethereum Virtual Machine, that the Hyperledger community did not have access to. This includes smart contracts that involve the management of digital tokens. These tokens can represent an asset or utility and exist on top of a blockchain. They are tradeable goods and can represent coins, loyalty points, in-game assets, and so on — an example is ERC-20 smart contracts. Fabric brings, via its modular architecture, accountability to participants through permissions (issued by Fabric Certificate Authority services), privacy (channels, ZKP), and private data (side-db), performance/scalability and fault-tolerant security gained through proven consensus algorithms. This relationship and interoperability between different blockchain technologies is essential and driving us closer to enabling a network of networks.

Networks working together

Finally, the component that will bring these blockchain networks and solutions together for an organization is a “mashup” application. This is expected to profoundly change the way organizations engage with blockchain networks and solutions, because now they only have to interact with one consistent application programming interface (API) and not an API for every network. This mashup application can include a variety of capabilities defined in data models and smart contracts, but fundamentally, it will serve as the glue that joins various networks together. As an organization continues to expand their use of blockchain, this architecture will allow them to scale accordingly and innovate at speeds necessary for their industry. Much like cloud platforms have delivered value for application development, blockchain platforms, such as the IBM Blockchain Platform, should help facilitate the advancement and delivery of blockchain mashup applications.

Organizations plus solutions are where networks form. Today, we are seeing first order benefits, but many solutions remain siloed. We are now closer to a tomorrow where an organizations ability to interconnect solutions are not restricting those organizations and solutions to a single network. We realized from the start that you cannot do blockchain on your own; you need a vibrant community and ecosystem of like-minded innovators who share the vision of helping to transform the way companies conduct business in the global economy. Blockchain technology is just scratching the surface of its potential; however, if we architect blockchain frameworks and solutions to interconnect, we can unlock the full power of a blockchain network of networks.