Chains Interoperation

5 min readMar 23, 2021

Why we need cross chain technology

As more business innovators have come to recognize the blockchain technology’s potential and capability, especially with increasing support from the governments, blockchain pioneers have developed numerous enterprise blockchain platforms to reshape a range of industries.

The proliferation of new chains makes blockchain interoperability a necessity.

Different blockchain applications using different platforms have unique architectures and protocols. Challenges of how applications talk to each other over the blockchains lie in the following four types of cross-chain communications. The complexity of cross-chain communication ascends moving down the list:

1. Same application deployed on different chains using the same infrastructure;

2. Different applications deployed on different chains using the same infrastructure;

3. Same application deployed on different chains using different infrastructures;

4. Different applications deployed on different chains using different infrastructure.

Unimpeded interactions among these disparate applications will become indispensable in the era of the Internet of Everything. Imagine a smart home equipped with intelligent appliances manufactured by different manufacturers. You need a dozen smartphone apps to control them. How smart can that be? Think of your iPhone’s iOS system as a blockchain platform. Most apps you download from the App Store will have a twin version in the Google Play for Android users. Switching smartphone operating platforms won’t block you from using the popular apps you tap every day. Siri can verbally control some of your apps to streamline the human-machine interactions involving multiple apps. However, the complication grows as the number of blockchain platforms (operating systems) piles up. Siri won’t be able to control the same app in iOS and Android. The real challenge of enterprise blockchain interoperability is more complicated than consumer apps in this example. A cross-chain interoperability platform can go beyond Siri (the cross-platform communication tool) by coordinating transmissions and interactions between different apps in different ecosystems, which solves the interoperability issues of different blockchains in the above four scenarios.

Application of cross-chain technology

Many companies are stepping up investments in blockchain because the market tends to sift out players clumsy in the tech. Large corporations have “old-fashioned” legacy systems, and smaller companies can’t afford sophisticated systems. It’s not moneywise to abandon what they have on hand just for a slice of new technology in question. The integration of blockchain systems with conventional systems emerges as one of the primary problems that intimidate business innovators.

Let’s examine how blockchain interoperability can be employed to tackle the problem in a car manufacturer context. Automakers use customized ERP systems to manage daily business operations and manufacturing activities. They purchase different components from suppliers who use separate systems to process orders. They also need to engage with logistics companies, financial providers as well as dealers to ensure smooth operation, and Automakers need to coordinate hundreds of thousands of third parties all over the world to obtain a holistic view of what is happening in the supply chain and anticipate the next operational steps to maintain fluent workflows. All the companies deal with each other using different systems developed by technologies from different generations. Adding new blockchain components to the legacy requires cross-chain interoperability that allows the new technology to talk to the existing systems through API or other interfaces.

To extend the example by adding international payment to the car manufacturing and dealing ecosystem, it requires cross-platform communication for transaction settlement. Automakers need financial support from banks and other financial institutions to pay suppliers, while suppliers need cash to fulfill the manufacturing orders. Blockchain interoperable platforms allow automakers to initiate payments from the banking network to settle orders made in suppliers’ systems using smart contracts.

Cross-chain interoperability doesn’t stop at application interaction between two blockchain networks, although it’s the most common manifestation of blockchain interoperability as we’ve seen many landing projects in the area.

The Jasper-Ubin project jointly conducted by the Bank of Canada and Monetary Authority of Singapore gives a good example of how blockchain interoperability can facilitate digital asset exchange. Cross-border payments involve a series of separate actions that may not move at the same direction, which could lead to incorrect payments and create inefficiency and risk. The project explores the possibility of eliminating the risk by ensuring all the actions either succeed or fail at the same time with two distributed ledger technology platforms — Corda on the Canadian side and Quorum in Singapore — based on Hashed Time-locked Contracts. The cross-platform operation provides each independent platform its own portion of sovereignty, while allowing secure asset transfer from one blockchain network to another without a trusted intermediary. In other words, cross-chain interoperability enables two different blockchain platforms to communicate directly.

Figure 1: Overview of an HTLC (Source: Accenture)

From a technical perspective, the concept is what Vitalik Buterin called “atomic swap” in the “payment-versus-payment or payment-versus-delivery” scenario in the report Chain Interoperability, i.e. there is a guarantee that either transfer happens or neither transfer does. Although the project does not provide a comprehensive solution for end-to-end payments in cross-border scenarios, it has proven the viability of blockchain interoperability to some extent.

WeCross developed by WeBank

Some argue that the basic functions, protocol, interface, and security mechanisms of blockchain infrastructure will become standardized in a matter of time. Cross-chain technology as a transitional product can pace up the progress.

At WeBank, we use cross-chain technology as a catalyst to propel the development of the ‘internet on blockchain’. We launched WeCross, a cross-ledger collaboration platform to facilitate interactions between different blockchains. It supports most mainstream platforms including FISCO BCOS and Hyperledger Fabric based on four core techniques: universal blockchain interface, heterogenous interchain protocol, trust transaction management, and multilateral inter-domain governance. It provides tailored solutions for scenarios like judicial services, IoTs, cross-platform personal data authorization and digital asset exchange.

Personal data has become one of the top concerns in the digital era. WeCross allows safe exchange of personal data among user agencies on heterogeneous blockchain networks. It solves data silos and data misuse problems through blockchain applications in digital identity registration, authentication and management, and cross-platform data sharing in a trusted and compliant manner leveraging cross-chain technology.

It’s evident that no single blockchain can solve all problems or meet various needs at once. Undoubtedly that cross-chain technology has accelerated blockchain adoption, and interoperability has become the key to fulfilling the potential of blockchain technology.

By Sookie Tao & Lilith Hu




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