EU report calls for blockchain interoperability and scalability standards
By: The Modex Team
Tags: Development, Modex, Scalability, Adoption, Blockchain

Published on March 6th by the European Union Blockchain Observatory and Forum, the report — dubbed “Scalability, Interoperability And Sustainability of Blockchains” — makes recommendations on how to better develop the blockchain technology, including the introduction of interoperability and scalability standards.

Prepared by blockchain tech firm ConsenSys on behalf of the European Union Blockchain Observatory and Forum, the report provides insights into the current and potential future states of blockchain in Europe, as well as suggestions on how to better make use of this groundbreaking technology. “The timing seems right for such a paper. The blockchain ecosystem has been steadily maturing over the past years, and projects are getting both larger and closer to going live, or have already done so. This is exciting, as we can expect several large platforms to attract significant user bases over the course of the year. In this paper we take a look at the current and likely future state of blockchain in Europe through the lens of large-scale blockchain platforms. Along the way we ask ourselves what factors, technical and organisational, are likely to shape how platforms develop, and make some observations and recommendations for entrepreneurs and policy makers about best practice.”

The current and future state of blockchain in Europe

Survey the blockchain ecosystem in Europe today and you will find an impressive number of startups and projects building platforms and decentralised applications, not to mention literally thousands of white papers, proofs of concept and Github repositories. You will also find a vast and vibrant community of associations, non-profit organisations, foundations, meetups and local, national and supranational government initiatives working to further the development and adoption of this new technology. What is harder to find are live platforms or applications with large, active user bases.

If 2016 was the “year of education”, when people learned about blockchain and its uses, 2017 the “year of proofs-of-concept”, during which people experimented to validate theses, and 2018 the “year of large-scale projects”, with a number of significant projects announced and in development, there is now very good reason to believe that 2019 will indeed be the “year when projects go live”, with a number of major platforms slated to go or already in production. According to the same report, policy makers should encourage educational and research initiatives as well as fiat money on-chain to facilitate blockchain-based payments and utilize Smart Contracts.

Easier for blockchains to work together

The authors recommend standards for digital identities and interoperability between blockchains, stating that “we can expect that over time it will become easier and easier for disparate blockchains to work together. This will be to the benefit of the ecosystem as a whole.” The report further states: “Our vision is that the first wave of blockchain adoption will be characterised by a large number of permissioned, purpose-built blockchain platforms geared towards a specific use case or user base. These blockchains will, however, not be completely walled off gardens. Instead, they will need to interact with the off-chain world as well as with each other. Just as TCP/IP and the rest of the Internet stack became the open, freely accessible backbone of the Web of Information, we think that a small number of global blockchain networks will also emerge as the backbone of a Web of Value.”

Solving the challenges, one step at a time

To get there, the blockchain community will need to solve an array of challenges that have been divided into three categories:

Scalability: the ability to handle large volumes of transactions at high speeds. “ If blockchain-based platforms and applications are to succeed, they will need to be able to scale sufficiently to meet the needs of their target markets or users.”

Interoperability: the ability to exchange data with other platforms, including those running different types of blockchains, as well as with the off-chain world. “ One category of interoperability approaches involves the use of trusted third-party authorities to validate transactions or information. Two or more blockchains, for example, might agree to trust an off-chain entity to either transfer information between the blockchains (an exchange) or to record the state of the respective blockchains so that each can trust what has transpired on the other (notary services). For blockchain-based platforms to succeed they will need to be able to communicate and share data, a property that is usually referred to as interoperability.”

Sustainability: a) the ability to run a large-scale blockchain platform or decentralised application in an environmentally responsible way, and b) the ability to govern projects, platforms and the core technology in such a way that they remain viable over the long term. “Finally, successful blockchain projects will need to be sustainable, in the sense of being viable over a long period of time.”

The entire report can be accessed here.