Why is blockchain interoperability so important?


At the moment a large number of blockchain networks are emerging. Each blockchain network has its own specific functional focus and targets a specific community. For instance in the financial services industry all types of blockchain networks are appearing each with its own specific focus, such as cross border payments, trade finance, securities, syndicated loans, KYC and many more. But also in one single area multiple blockchain networks have been launched.


Good example is trade finance, an area where multiple blockchain networks have been set up by different consortia (We.Trade, Voltron, Marco Polo, HKTFP). Several banks participate in more than one network. The reason for that is that the banks they are working with participate in different networks. The situation in trade finance is not exceptional, also in other industries and business domains multiple blockchain networks are emerging. But business processes do not stop are the edge of a specific blockchain networks. Therefore there is already a growing need to bridge different blockchain networks so that the value of these blockchain networks can be maximal leveraged. But integrating different blockchain networks means that data from one blockchain network must be transformed into a transaction with specific data that is submitted to another blockchain network.

Supply Chain

For instance, the registration in a supply chain focussed blockchain network that goods have been delivered at a certain point in the supply chain can be the trigger for the payment between buyer and supplier on another blockchain network. This requires an integration between two networks that is more than just a swap of assets, such as the transformation of bill-of-lading data message into a payment message as well as the lookup of account/wallet identifiers of both buyer and seller to submit a payment transaction to the payment blockchain network. It is also very likely that connectivity is required to blockchain networks that are based on different blockchain technologies.

The value of the distributed trust model

At the same time it is crucial that the distributed trust model of blockchain/DLT is preserved, meaning that it should be avoided that the integration component becomes a single point of trust and vulnerability. That also applies for the node of the originating network from which the data is fed into the integration component. Therefore it is essential that the integration component consists of multiple instances that operate independently of each other and verify each other’s operation as well as the data on the nodes of the originating network.

Why The Unchain Blockchain Gateway is important

The Unchain Blockchain Gateway has been designed in such a way that it can facilitate this blockchain network integration/interoperability accordingly the distributed trust model. This is done by running multiple instances of the same integration adapters in separate deployment environments and make use of the multi-sign feature of blockchain smart contracts. Only when a transaction, that has been submitted by one of the adapter instances to the target blockchain network, has been validated and approved/signed by other adapter instances (1 or more, depending on the required signatures in the smart contract), it is accepted by and executed on the target blockchain network. The attractive part of this model is that it is applicable irrespectively the underlying technologies of both blockchain networks.

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