How can companies or governments collaborate on an international level? This is not a new problem, but in recent years blockchain and other distributed ledger technologies (DLT) have emerged as a leading contender in new technology to address these challenges. Use cases create opportunities for blockchain to increase trust and transparency among actors, to secure immutable data and increase efficiency in transactions, and incentivize actors to act responsibly according to the rules of a system. Many of these use cases have the characteristics of utilities, which could lead to a vendor lock-in and a disproportionate balance of power in favour of large blockchain solution providers, unless their development is managed carefully. For this reason, interoperability has become a priority for both governments and industry actors conducting pilot projects.
The whitepaper aims to explore the challenges to actually implementing blockchain interoperability from legal, technical, and governance points of view. Interoperability is complex, and the fact that blockchain is still an emerging technology further complicates efforts to solve interoperability in the general case. With most pilot projects being conducted by private sector actors, there is a risk of the dominant technology being chosen by market forces alone. At the same time, there is an opportunity for the public sector to take an active role in guiding the development of the technology towards incorporating interoperability-by-design, as well as distributed governance models for DLT infrastructure .