The Next Great Leap in Blockchain Interoperability

The future of blockchain technology is interoperability. But historically, blockchain interoperability hasn’t come easy. The Bitcoin whitepaper was published in 2008 but it wasn’t until the last few years that the concept even began to emerge in any practical form. The problem has been persistent through the bulk of the blockchain era and is one that developers have largely found insuperable to date.

Blockchain networks have always struggled to communicate with one another. Each blockchain is a law unto itself, siloed from the others and unable to communicate freely beyond its own network. This isolation of incompatible technologies is commonly referred to as the oracle problem.

But almost 15 years since the publication of the Bitcoin whitepaper, blockchain interoperability is set to make a great leap forward with the advent of software interoperability solutions.

The interoperability issue

Historically, blockchain’s interoperability problem means that assets or data held on one chain could not be transferred to another. It’s akin to being unable to send dollars to a British bank account.

Oracle providers such as Chainlink offer one way for blockchains to bridge the gap and solve the Oracle problem. Chainlink can act as middleware between blockchains, pulling data from one chain and pushing it to another. (Chainlink can also provide data from off-chain sources.)

While the technology now exists for cross-chain communication, more human-level problems persist. There is a significant amount of tribalism in the blockchain sector between rival chains and their proponents, which doesn’t exactly set the stage for interoperability. This phenomenon is exemplified by the so-called Bitcoin maximalists who believe that every chain other than Bitcoin is basically trash.

Although the OG cryptocurrency Bitcoin remains venerated across the crypto community, it is Ethereum and its smart contract functionality that transformed blockchain into an industry. There are now multiple chains that run smart contracts, each with its own group of proponents and fans.

Sadly, this too can cause entrenched tribalism. A deeper level of interoperability could go some way to bringing down these walls.

Thinking about software

Today, much of the talk about interoperability focuses on the blockchains themselves – but there are other types of interoperability that remain less discussed. Interoperability at the software level is one area that has, until recently, proved to be lacking in proper analysis or consideration. Thankfully, that looks set to change.

Last year Microsoft’s M12 led a $20 million strategic funding round for Space and Time, a decentralized data platform billed as a “decentralized data warehouse that joins tamperproof on-chain and off-chain data to power a new generation of smart contract use cases.”

M12 is the venture capital wing of Microsoft, and one of its primary aims is to bring promising technologies to the tech giant’s customers. Space and Time clearly fits the bill. Its AI-powered SQL is a decentralized data warehouse of sorts with a myriad of use cases and exploitable benefits.

In a nutshell, Space and Time enables developers to use data from multiple sources including an array of blockchains. The platform can load and utilize data from any source, both on-chain and off-chain, as it brings the next generation of developer tools to market. It further aggregates data from multiple sources including multiple major blockchains and can provide analytics from that data. Space and Time support transactions, too.

Thanks to its partnership with Microsoft Azure, Space and Time will now be available on the cloud.

The benefits of software interoperability

The dawn of software interoperability for blockchain could spell many benefits in the longer term.

Increased productivity: Interoperability can help developers to be even more productive by reducing the need to write custom code to integrate different applications.

Improved flexibility: Interoperability can help developers to create more flexible applications which can be easily adapted to changing requirements. This is because interoperable applications can be easily integrated with new applications and data sources.

Reduced costs: Interoperability can help to reduce the costs of software development by reducing the need to purchase multiple applications for different tasks. This can save money in the long run, and can also help to improve the efficiency of the development process.

An Interconnected World

As the world becomes more interconnected, the importance of software interoperability becomes increasingly important, particularly in the context of the fast-growing blockchain space.

In the past, interoperability has caused a headache for blockchain developers and, at least to some degree, stunted its growth. Now, the industry appears set to make the next great interoperability breakthrough thanks to Space and Time and Microsoft Azure.