This is Part 2 in a series on the I-DELTA project. Read Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8.
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Interoperability between different chains can generally be done in three ways. These are notary schemes, relay schemes and hash-locking schemes:

1. Notary Schemes: A notary scheme is a structure that validates a transaction on Ledger A and proves it to Ledger B. The group that performs these operations acts as a reliable notary. This notary structure is formed by multiple nodes and runs a consensus in itself.

2. Relay (Sidechain) Schemes: The smart contract on any ledger can read, validate, or act according to the incoming state or event on other ledgers. The contract can read information since part of the other ledger is stored in the ledger where the smart contract is located. It implies that there is no need for 3rd party interfaces; ledgers can talk directly among themselves. There are two types of relays; one-way and two-way.

1. One-way relays: Ledger A can read the data on Ledger B; however, B cannot read A's. For example, BTC-Relay is a smart contract on Ethereum and can read data in Bitcoin; however, Bitcoin cannot read the data in Ethereum. For this reason, it is one-way.

2. Two-way relays: Ledger A and B can read data mutually. For example, when Alice wants to buy something from the market with BTC and the merchant only uses ETH, if there is a two-way relay between the Ethereum and Bitcoin networks, Alice makes the payment and get the cashback in Bitcoin while the merchant takes ETH and give ETH as a cashback.

3. Hash-Locking: In Relay schemes, it is necessary to partially store the data of the other ledger. However, in hash-locking, just hash sharing is enough. Let's say that Alice wants to send ETH to Bob, and receive BTC from Bob. Alice sends her ETH through a smart contract, which is locked with a hash whose secret input is only known by Alice. Bob locks his BTC transaction using the hash he sees in the smart contract. When Alice sees this, she unlocks it using her hash lock’s secret input. When Bob sees this, he unlocks the ETH that is sent to him. Bitcoin and Ethereum’s timeout/timelock capabilities can be used to avoid infinite locks.

Interoperability Case Studies

Use Case - 1: Deloitte connected two non-compatible blockchain platforms Ethereum and Hyperledger Fabric with two non-blockchain platforms Singapore Exchange (SGX) and Monetary Authority of Singapore using the combination of API-based approach and trusted agent-based approach (oracle). They focused on the reducing turnaround time of the delivery-versus-payment (DvP) process to lower the risk of counterparties and diminish the required liquidity in the targeted ecosystem.

To find an effective solution to the interoperability issue they executed delivery leg on the permissioned Hyperledger Fabric platform and used a digital currency named as Ubin, which is backed with one SGD (Singapore Dollar) to run on crypto-enabled Ethereum platform.

To overcome the integration challenges of permissioned and permissionless blockchain platforms Deloitte used the smart contract of Hyperledger Fabric to trigger payment at the Ethereum network upon the change of title of the securities. The SGX server first shares a secret with the seller to lock and validate the ownership of the securities on Hyperledger Fabric. After this process SGX server generates a different secret for buyers to lock their payment on Ethereum. An event triggered smart contract will swap two generated secrets with buyer and seller simultaneously to enable them to unlock and receive securities and payment respectively.

With the benefit of this approach the need for intermediates such as custodians has been eliminated to reduce the counterparty risk [28].

Use Case - 2: EVRYTHNG Product Cloud created a powerful and scalable orchestration layer between a growing number of leading blockchain protocols and solutions. It’s an approach which extends the smart capabilities of digitized products with the decentralized features of integrated blockchains. They enabled data about products (e.g. supply chain history, consumer scans, temperature, current owner, etc.) to be replicated to, or collected from, different blockchains. This might be supply chain history, live tracking data or consumer engagement.

EVRYTHNG offers an API gateway called Blockchain Integration Hub to resolve supply-chain integrity issues and enables new direct-to-consumer applications triggered by end customers scanning products with their smartphones. To do this they transformed a physical item into a digital object that exists and interacts on the web. This approach made it possible to create scannable and interactive physical objects and given software intelligence to participate in new applications [28].                                        

Use Case - 3: Interoperability in healthcare has traditionally been focused around data exchange between business entities, for example, different hospital systems. However, there has been a recent push towards patient-driven interoperability, in which health data exchange is patient-mediated and patient-driven. Patient-centered interoperability, however, brings with it new challenges and requirements around security and privacy, technology, incentives, and governance that must be addressed for this type of data sharing to succeed at scale.

Using a public or private blockchain to actually store clinical data is one example—for example, Yue et al. described a “Healthcare Data Gateway” (HDG) which would enable patients to manage their own health data stored on a private blockchain. Similarly, Ivan described a public blockchain implementation, where healthcare data is encrypted but stored publicly, creating a blockchain-based Personal Health Record [62]. MedChain is another example, where a permissioned network of medication stakeholders (including the patient) could be used to facilitate medication-specific data sharing between patients, hospitals, and pharmacies [62]. While we imagine that a model storing actual clinical data on a blockchain—permissioned or public—would have substantial privacy and scalability concerns, it is important to continue to understand the privacy and security implications of on-chain data storage.

In the healthcare space, FHIRChain is a smart-contract based system for exchanging health data based on the standard FHIR [62], where clinical data is stored off chain, and the blockchain itself stores encrypted meta-data which serve as pointers to the primary data source (like an EHR) [62]

Use Case - 4 : Ethereum to Quorum Asset Transfer - Hyperledger Cactus is to offer value transfer between two different blockchain ledger technologies. For example, a user can have assets stored in Ethereum ledger. But now, he wants to exchange it for assets on the Quorum ledger. In general circumstances without the exchanger solution, the user needs to sell his Ethereum assets and then buy the Quorum assets using the money. But, that’s not possible for all types of assets.To solve that particular issue, Hyperledger Cactus  offerS Escrowed Asset Transfer social interaction. This interaction is important as it will give the user the flexibility to choose the blockchain ledger of his choice.In this Hyperledger Cactus use case, the user once he transfers the assets from Ethereum will lose it from there. However, the asset will now be available on the Quorum ledger. Also, to make it work, the ledgers need to be provisioned and the exchanger should have its identities established before the exchange takes place.

Open Standards for Blockchain Interoperability

We are aware of standardization efforts of the following standardization organizations which are on specific blockchain topics as summarized below [23]:

●      IEEE Blockchain Initiative [24] is mainly focusing on agriculture, medicine, and IoT.

●      ISO/TC 307 technical committee [25] is working on distributed ledger technologies

●      W3C community group [26] is working on the web Ledger Protocol which will be used to serve the protocol and format of the decentralized ledgers on the web

There are also studies like [27 -28] which are focusing on how open standards can be developed.

Recent report [28] is about the interoperability of supply chains which are enterprise permissioned based solutions. Some of these efforts on the interoperability can pave the way to standardization [28]:

●      Blockchain Industrial Alliance (BIA): BIA works on cross-blockchain transactions and interconnectivity.

●      Digital Container Shipping Association (DCSA): DCSA works for the interoperability in the container shipping industry.

●      European Blockchain Partnership (EBP): EBP is working on a European Blockchain Services Infrastructure (EBSI)  which will connect countries and be used for the delivery of the cross-border digital public services

●      Enterprise Ethereum Alliance (EEA): EEA aims to develop open blockchain specifications for worldwide interoperability of the businesses.
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This is Part 2 in a series on the I-DELTA project. Read Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8.
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