Inclusive Deployment of Blockchain for Supply Chains: Part 6 – A Framework for Blockchain Interoperability

Published on the 1st April 2020

Public and permissioned blockchains are now widely used for consumer-to-consumer (C2C) and business-to-business (B2B) data exchanges. In public blockchains, interoperability has been in development for many years – for instance, cross-chain, sidechains, proxy tokens, etc. However, a bigger challenge and, at the same time, a much bigger opportunity exists given interoperability among enterprise-grade permissioned blockchains.

While still evolving, some solutions, such as trade finance platforms built under one jurisdiction, fail to realize the expected value, because trade and supply chains are global by nature. The value will come once different trade finance platforms in different countries can interoperate. Similarly, a traceability network is useless if data cannot be exchanged across industries, including manufacturers, logistics, wholesalers and retailers.

Contrary to common belief, this specific challenge is not only a technology problem, but also a problem in terms of governance, data ownership and commercial business models that incentivize ecosystem stakeholders to collaborate with each other.

The 2020 coronavirus pandemic exposed weaknesses in supply-chain systems. Organizations globally (in both the public and private sectors) showed varying degrees of ability to respond. This revealed a breakdown in the collaboration required to track, trace, authenticate, finance and clear medical goods, supplies, etc. through trade channels in a trusted, verifiable and efficient manner. Such global events highlight the need for an interconnected and interoperable supply chain in a world after COVID-19.

Interoperability is the capacity of computer systems to exchange and make use of information. It is the capacity of systems to collaborate with each other, where collaborating in this sense entails the ability to transfer information or an asset between two or more systems while keeping the state and uniqueness of that entity consistent.

The distributed nature of blockchain makes this ordinarily straightforward concept quite complex. In addition, interoperability for blockchain platforms implies that transactions involving parties or assets that belong to different blockchain platforms can be executed as if they belonged to the same blockchain platform. Successful interoperability enables the user to trust that “I know what I see is what you see” within a single platform as well as across platforms.

Authors

Linda Pawczuk, Global Consulting Blockchain and Digital Assets Leader, Deloitte, USA

Jesper Mathias Nielsen, Manager, Deloitte, Denmark

Paul Kwan HangSin, Consulting Partner, Deloitte, China

Nadia Hewett, Project Lead, Blockchain and Digital Currency, World Economic Forum, USA