Blockchain and Interoperability - Guide for Beginners

Blockchain and Interoperability 

First Generation  Blockchain began in 2009 with the creation of bitcoin. Bitcoin is that application which validates and secures its transactions using different algorithms and cryptography. Bitcoin does not rely on trusted third parties like banks to perform these functions. Instead, it is a permission-free, peer-to-peer / system-to-system application that is not owned or controlled by any one party. Many other single-application Blockchains, such as Namcoin and Litcoin, have emerged by changing the Bitcoin core to create other digital currencies. Ripple, the Blockchain major protocol for currency exchange, also developed in this era.

Second Generation Blockchain  began in 2015 with the foundation of Ethereum. Ethereum provides a platform on which Blockchain applications can be built. Developers can use smart contracts - self-executed contracts whose terms and conditions are written directly in code - to build applications on the system. At the same time, the permanent ledger unethically secures and records all transactions. In addition, Interoperability is built into the system, as all applications run on the same Blockchain.

And Finally Third Generation era of Blockchain describes a number of ongoing projects to improve Scalability, Interoperability, Privacy, and Sustainability. 

Blockchain-and-Interoperability-Guide-for-Beginners-@Blockchain-Briefings

Blockchain Third Generation projects aim to create seamless interconnection between the following Blockchains:

• Many Public Blockchains such as Bitcoin and Ethereum.

• Many Private Blockchains, such as Hyperleader Fabric and R3.

• Public and Private Blockchains, such as Ethereum and Hyperledger.

• Legacy systems, such as Medylager and SAP or blockchain with Ripple and Swift.

However, these projects are still in beta version or are still under development. Although interoperability is in its early stages of development, "Towards Blockchain  Interoperability" states that enterprises can still negotiate key business and technical concerns about Interoperability.

What is Blockchain Interoperability ?  Why is it necessary?

The absence of standards in the Blockchain may give developers freedom, but the Blockchain is unlikely to have differences and inefficiencies in the event of a headache by the IT department. Interoperability here means the possibility of freely sharing value across all Blockchain networks without the need for intermediaries. In the interoperable ecosystem, you can experience downtime with users of other Blockchain networks without spending resources on translation. You can get information from other members, process what they have sent and respond accordingly.

The biggest Challenge for Interoperability is the existence of several Blockchain networks that differ in parameters such as consensus models, transaction plans, and smart phone functionality. Several standardization efforts are underway to deal with issues of Interoperability. One chance is to utilize existing gauges in new Blockchain applications. IBM and Microsoft, for example, are adopting data standards developed by GS1 to implement differences in their Blockchain applications for the supply chain. Another option is to develop standards from scratch Blockchain Interoperability efforts are divided into two categories: open protocols and multi-chain frameworks.

• Open Protocol: standardized protocols that allow Blockchain to communicate with each other without intermediaries or trust processes. The most commonly recognized open protocol is atomic swap.

• Multi-Chain Framework: Blockchains can plug into a framework to become a part of a standardized ecosystem and transfer data and value between each other. Multi-chain frameworks are more complex than open protocols.

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Interoperability in Blockchain has the following benefits:

• Smooth information sharing in participating Blockchain .

• Easy execution of smart contracts in Blockchain .

• Sharing Blockchain solutions and collaboration on ongoing development for enterprises.

• Possibility for IT staff to develop in-depth knowledge of some key Blockchain standards rather than having basic knowledge of multiple protocols.

• Opportunity to develop partnerships within the Blockchain ecosystem.