Join top executives in San Francisco on July 11-12, to hear how leaders are integrating and optimizing AI investments for success. Learn More
While the Web3 industry is still emerging, the catalyst that will kick this revolution into high gear is hidden in the tech stack. Key improvements in Web3 interoperability will unlock new use cases and upgrade the fundamental systems we rely on every day. And with time, blockchain interoperability is bound to impact every sector across the globe.
What is interoperability?
Interoperability, put simply, is the ability to move something from one system to another. This could mean something as simple as texting an iPhone from an Android phone, or something more complex like transferring a token across blockchains. A seemingly intuitive action like money transfer is surprisingly intricate: We rely on interoperability not only to send currency from one system to another, but to ensure protection against double spending: A flaw in which the initial system sending an asset keeps a copy for use.
In the Web3 terrain, it’s difficult to find an area unaffected by interoperability. The fundamental networking concept is baked into the code of every project, from Binance to OpenSea. Upgrading Web3 interoperability is like updating the engine in a car; improving this key fundamental will bolster everything built on top of it.
Real world example: Building gamers a truly open world
Real world examples abound, but before we move into more long-term and visionary use cases, let’s start with a couple of tangible examples that are especially ripe for innovation through interoperability. Two sectors with enormous potential include gaming and identity verification.
Join us in San Francisco on July 11-12, where top executives will share how they have integrated and optimized AI investments for success and avoided common pitfalls.
We’ll begin with gaming. As one of the most popular and profitable sectors of the entertainment industry, gaming is known for its cutting-edge tech and unbridled creativity. The gaming industry has exploded in popularity, with a market size expected to reach $435 billion by 2028. Developers have built intricate open worlds, limitless canvases of self-expression and compelling social experiences — constantly expanding the borders of this ever-evolving medium.
Despite sitting on the bleeding edge of tech, however, gaming is limited by a stark lack of interoperability across projects. Today, even the most enthralling experiences and well-funded projects are still siloed isolated escapades — even the best open worlds aren’t actually that “open.”
One of the most notable limitations in gaming is the lack of a persistent digital identity. Gamers work tirelessly to develop their online presence — they take care to customize everything about their in-game character, work tirelessly to earn in-game currency and steadily build up their reputation within their community — but their entire identity disappears the second they venture from one game to another.
Fostering developer freedom
Some games such as Roblox have already begun addressing these issues. Roblox is designed as a platform for game developers to launch their projects. Using a central hub, players are able to seamlessly jump from project to project without ever leaving the Roblox platform. Projects across the platform use the same Roblox-sanctioned digital currency and players keep their wealth and identity across every project they load up.
However, to accomplish this level of interoperability, Roblox was forced to make sacrifices in developer freedom and game design. All Roblox projects must be built with Roblox-mandated tools, including a coding language and rendering engine — leaving developers with little freedom when it comes to art style and advanced game design.
Other projects have embraced designs that preserve developer freedom, but these too come with trade-offs. Take a game like Decentraland. This Web3 native game tokenizes many in-game assets, allowing them to exist outside the confines of the game just like a crypto token or NFT.
This hands-off approach doesn’t limit developers. Anyone is free to interpret the tokens however they’d like. But transferring Decentraland tokens are complex, typically involving wallets, gas fees and — most critically — cross-chain bridges.
Bridges in particular are notorious for falling victim to high-profile attacks. This year alone, more than $2 billion has been stolen in cross-chain bridge hacks. This means that to move assets across games, players often have to take on the risk that their account is drained in a hack — which would mean losing their identity and all the assets they have worked so hard to earn.
A more secure and robust interoperability standard is needed to ensure safe transfers and to streamline the process. Ideally, it should be as simple as loading up a Roblox game, not as complex as a science project.
On the horizon: Solving a growing identity crisis
Another real world example ripe for further innovation through interoperability is identity verification. The ability to prove your identity is crucial to a functioning civilization and economy. Having a formal way to identify ourselves, our ideas and our material possessions is what allows us to exchange and create global markets. But currently, identity verification infrastructure is highly limited.
While global standards — passports, for example — exist, these records are maintained strictly by governments and are extremely limited in the details they contain. Take a moment to consider the many elements of your identity (school transcripts, diplomas, certifications, work experience); none can be encoded into a passport. In fact, they’re all managed by various parties: Your diploma can only be verified by your university; your work experience by your employer. We rely on a confusingly tangled web of identity verification that makes due diligence inefficient and allows fraud to fester.
On top of this, a large portion of the world lacks any means of identity verification altogether. A stunning 1.1 billion people around the world have no means of proving their first and last name, date of birth or nationality. This leads to great difficulty in opening a bank account, voting in an election, getting a job and ultimately participating as an integrated member of society.
Advancements in identity management
Blockchain technology can be leveraged to improve management and storage of digital identities, providing unified and tamper-proof infrastructure that provides security and authentication through cryptography.
Blockchain brings exciting advancements to identity management by way of an interoperable and verifiable way to unify identity information such as attributes, claims, attestations and credentials. For example, an identity can include memberships, certifications, qualifications and even co-worker acknowledgments.
Even more powerful is the potential to preserve this data’s privacy while verifying the accuracy using a cryptography concept called “zero-knowledge proofs.” Specifically, zero-knowledge proofs can be used to verify identity tokens (or just owner-approved portions) and prove that they’re accurate while maintaining privacy.
Already, great progress has been made in making digital identity solutions a reality. Soulbound tokens — which can never be transferred to another user — can be used to represent certifications, experience, memberships and degrees, and can be verified in the blink of an eye. In addition, digital cryptography is cheap, particularly when compared to the physical security measures built into IDs and Passports. And, it will likely extend access to low-income demographics that have long been ignored.
However, all of this functionality is moot without the means to easily share and verify soulbound tokens across various platforms. Tools like passports are useful because they can be verified by countries across the globe — the product of a robust universal standard agreed upon by scores of independent governments.
In the same vein, it’s important to establish a protocol to ensure that Soulbound tokens and any other tokenized identity solutions are easily interoperable across an increasingly heterogeneous Web3 ecosystem.
Looking forward: Visionary use cases
The benefits and potentials of Web3 interoperability are especially tangible in gaming and identity verification, but their reach extends across a broad swath of industries relying on antiquated systems and communication standards. Moving beyond near-term use cases, there are compelling visions and new areas of disruption on the horizon. Realms like voting are ripe for disruption, and blockchain-based voting may not be too far off.
Because blockchain is decentralized and can be anonymized, it comprises all of the essentials for making shared, fair and democratic decisions. Plus there is no possibility for manipulation, recording errors or tampering.
Along with voting, many have speculated about the enormous potential that interoperable blockchain technology holds for improving the healthcare industry, specifically for revolutionizing the way that medical records are stored, recorded, owned, and shared. Of course, this needs to be done in a way that preserves privacy and provides absolute security, and there are various compliance-related requirements that will need to be carefully considered.
As we move into the future and Web3 development continues at lightning speed — venturing out in new directions and bringing unpredictable new use cases into the fold — it’s important not to lose sight of the bigger picture.
Web3 projects must evolve to be accessible and universally intertwined, not hidden away in isolated silos. Robust interoperability is the key ingredient that transforms a neat proof of concept into an indispensable tool with real world utility.
Theo Gauthier is CEO of Toposware.
Welcome to the VentureBeat community!
DataDecisionMakers is where experts, including the technical people doing data work, can share data-related insights and innovation.
If you want to read about cutting-edge ideas and up-to-date information, best practices, and the future of data and data tech, join us at DataDecisionMakers.
You might even consider contributing an article of your own!