In 2017, Bitcoin rallied hard and put blockchain on the map, yet most people are unaware of what it is. Interoperability is a new buzzword that you often hear when people talk about their favorite cryptocurrencies, what exactly does it mean? How does it make bitcoin more viable?
What is a Blockchain
A blockchain is a list of records that are very difficult to tamper with, it contains data about the time and transactions that occur. The blockchain system is now widely used by various organizations for a large variety of functions. The list can grow infinitely and are linked via cryptography. Each record contains a hash that points to the previous record, the timestamp, and transaction details. The list is shared between users by a peer to peer network and requires majority consensus for changes.
Popular Blockchains and their Functions
The most popular use of blockchains now is a cryptocurrency where these records act as a medium of exchange. The details of individual ownership are stored in these strong cryptographic records. Bitcoin, Ethereum and Libra are some of the well-known cryptocurrency platforms
With Blockchain it is possible to create and maintain a permanent ledger system to compile data on a supply-chain including distribution networks and payments made. IBM has partnered with Walmart to implement this into their supply-chain and facilitate worldwide monitoring (of the supply chain). IBM is also working on a music distribution system with ASCAP and PRS.
Practical uses for Interoperability
Interoperability allows completely independent blockchains to communicate and work within the same system. Since the most popular blockchain is a cryptocurrency, in a practical situation involving the above blockchains, one can buy their music or distribution rights with cryptocurrency. Another application might be to monitor the sales of particular albums to efficiently manipulate the physical stock of CDs and Vinyl.
It’s very easy to talk about blockchains these days, as most people are unaware of the specifics. Many companies have started initiatives for it and billions of dollars have been invested. But one should always invest time into researching this topic thoroughly before investing money into it.