Connecting Ecosystems: Blockchain Integration

As ecosystems develop around competing blockchain platforms, it is clear that interaction between these platforms is essential for success. Early efforts to solve integration challenges have ventured towards cooperative standards incorporated into each codebase or messaging, which undermines the core bene昀椀ts of blockchain. Accenture developed an approach that enables two or more DLT systems to work together without changes to the DLT platforms or introducing messaging. We completed the 昀椀rst working prototypes and continue to re昀椀ne solutions that enable interaction between ecosystems while maximizing the bene昀椀ts of distributed ledgers. 2 CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION

PLATFORM GROWTH DRIVES INNOVATION Innovation around distributed ledger (and speci昀椀cally blockchain) technology has undoubtedly bene昀椀ted from competing platforms. Development and engagement on platforms from Bitcoin, Ethereum, Hyperledger, Digital Asset, R3 Corda and more, have resulted in decentralized, vibrant innovation ecosystems delivering rapid development and implementation. This innovation and platform growth through the chain. But the banks that 昀椀nance is showing no signs of slowing down. trade and the insurance companies that Gartner has estimated the number of insure the goods are also important players platforms at more than 70, and suggests in an end-to-end supply chain transaction. a period of competition and consolidation Each build systems that establish letters of will ultimately narrow the 昀椀eld to 昀椀ve primary credit, transfer funds or initiate a claim, all 1 providers. Further, if blockchain evolves like established and triggered by the movements other technology, some of these dominant of goods tracked by the supply chain. platforms may not yet even exist. As this market of blockchain vendors continues Several consortia are already working to increase, and ecosystems around those to put these processes on a distributed platforms continue to grow, interactions ledger. The goal is to reduce the amount between platforms will be essential. of documentation and back-and-forth messaging so that the processes can be Consider a distributed ledger technology more ef昀椀cient, risk can be managed more (DLT)-enabled supply chain. Distributed effectively, and capital can be freed up. ledger technology can simplify, streamline, and integrate the end-to-end data associated With an industry as interlinked and wide with moving physical goods in a supply chain. spanning as supply chain, these solutions cannot exist in a vacuum. The ability to link and interact Each participant—from mining to re昀椀nement, manufacturing to shipping, and wholesalers in an end-to-end, seamless solution is required to retailers--will bene昀椀t from access to if companies hope to reap the full value of DLT. a single source of truth as goods move CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION 3

WHAT IS BLOCKCHAIN INTEGRATION The ability to transfer an asset between two or more DLT platforms with the con昀椀dence that its uniqueness and state are kept consistent. The ability to maintain a consistent state of a data element on two or more DLT systems simultaneously; ‘I see what you see’ across different DLT ecosystems. 4 CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION

BLOCKCHAIN PLATFORMS ARE GROWING WITH THEIR ABILITY TO UNLOCK BUSINESS VALUE Blockchain maturity and innovation are accelerating. Looking beyond a one size 昀椀ts all platform has sparked new possibilities. It may lead to platform innovations we can’t yet imagine. But as ecosystems develop around platforms, they must also interact. If they can’t blockchain won’t achieve its full potential. For further innovation and implementation, we must establish the ability for current and future platforms to interoperate without adding complexity or compromising blockchain’s unique attributes. Freight & Logistics Banks Retailers Manufacturers Insurers Ports & Customs CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION 5

Solving for integration between platforms Looking to the future, full integration may seem simple. One platform need only between different blockchain platforms communicate with another the status of a will be necessary to maximize bene昀椀ts particular data object and/or pass control. of distributed ledger technology. But that apparently simple suggestion For two or more platforms to truly interoperate reintroduces the need for messaging and in a way that preserves and extends the core data reconciliation—the very thing that value and principles of blockchain, there can blockchain so valuably eliminates. It is possible be no messaging. for leading platforms to work together to develop a common standard against which The state of a data object must be certain and each platform’s engineers could design and consistent in both platforms simultaneously. code compatible components. However, Passing control of a data element from one early interest in resolving this problem DLT platform to another must come with the collaboratively between platform providers con昀椀dence that its uniqueness and state are have been stymied by two primary challenges: kept consistent. The ability to audit, trace, and verify data elements across their full lifecycle • First, the competitive dynamic of the over ‘in network’ DLT platforms must be respective DLT platform providers and their preserved across all platforms. focus on getting to or moving beyond the While some forms of interaction and 昀椀rst versions of their platforms makes their imminent productive collaboration unlikely. communication are possible today, no best practice has yet emerged that achieves • Second, even if that collaboration were to ‘interoperability’ such that we can maintain happen, the resulting harmonization could the ef昀椀ciencies and simplicity that drives limit further innovation. blockchain value. There have been a few early attempts to sidestep the competitive issues outlined above and move toward a DLT network that can span ecosystems. R3 developed a system that allows applications built on its platform to be able to interact seamlessly. While this resolves communication between distinct ecosystems, it focused on ecosystems built on R3’s platform. 6 CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION

CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION 7

ACHIEVING BLOCKCHAIN INTEGRATION So how do we establish the ability for current and future DLT platforms to integrate without compromising the technology’s bene昀椀ts or miring it in complexity? Accenture determined that a novel approach was needed, one that would allow: The ability for the state of The ability to audit, trace, an asset or data value to be and verify data elements consistent on two or more across their full lifecycle DLT platforms simultaneously and across DLT platforms Data element control to be Avoid the necessity of structural transferable from one DLT platform changes to the DLT systems to another with the con昀椀dence that are to be included in the that its uniqueness and state are integrating networks kept consistent 1 For context, the scope of our approach is limited to permissioned DLT systems with the necessary governance and policy/rules by which the two or more DLT systems participants will work together. 1 Accenture has developed a derivative approach that could be applied for public/permission-less systems, but that is not the focus of this POV nor the vast majority of our client work. 8 CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION

ATTAIN INTEGRATION BY ESTABLISHING AN INTEROPERABILITY NODE The basis of Accenture’s integration solution Value transfer: the ability to is to establish a trusted ‘interoperability node’ transfer a tokenized asset from that sits between the target DLT systems. This one DLT ecosystem to another interoperability node is given the appropriate where different DLT platforms identity and access control capabilities to are used while protecting against all in-scope DLT systems. For processes that “double spend” and maintaining require movement of assets from one platform to 昀椀delity and provenance. another (and must identically and simultaneously exist on those networks), the interoperability Active state: the ability to node enables that synchronization. Within the have a mutualized data element node, a rules engine governs the appropriate or piece of reference data to movement or alignment of data between DLT simultaneously exist in two or systems. There are two possible approaches: more DLT platforms/ecosystems such that it is kept in constant synch; all participants are able to say”I see what you see”. DLT 1 DLT 2 Node 1 Node 1 Node 2 Interoperability Node 2 Node Gateway Gateway Node Node Node 3 Node 3 Node 4 Node 4 Node 5 Node 5 CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION 9

An integration protocol Additional considerations for the solution included: requires that the leaders Asset Locking Mechanism in of two or more DLT based value transfer. At a high-level, ecosystems establish assets are transferred from one DLT to another by “locking” the the business rules, asset on the 昀椀rst chain and then creating a representation of the policies, standards, and governance by which asset on the second DLT platform. they agree to work Prevent Double-Spend in “active state.” When building together. The business a blockchain integration solution, the solution must maintain as logic resulting from these many blockchain-like guarantees governance agreements as is possible. For digital assets (even, digital representations is then used to con昀椀gure of real-world assets), it is the interoperability necessary to ensure that multiple representations of the same asset node and technical do not exist at the same time. implementation. For example, double-spend in a supply-chain may make some assets disappear and other assets be overcounted. 10 CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION

PROGRESS AND NEXT STEPS The ability for Blockchain-powered business networks to achieve maximum scale and utility will become a reality only when we have a reliable and robust DLT integration solution. Enterprise leaders have had lingering concerns about selecting the “wrong platform” upon which to build solutions. Having con昀椀dence in being able to integrate across different platforms depressurizes much of that concern. Accenture built the 昀椀rst working prototype of an Interoperability Node capability and is engaging with clients on 昀椀rst implementations to prove its readiness for production. Our near-term goals are to continue to test effectiveness with each of the leading DLT platforms and work with clients and partners to expand the possibilities for cross-industry/cross-process collaboration. As we move forward, we expect integration will create new opportunities. It can free the capital and time necessary to drive further ef昀椀ciencies. It can unleash capabilities from combined datasets and a potential uni昀椀cation of identity protocols. CONNECTING ECOSYSTEMS: BLOCKCHAIN INTEGRATION 11

REFERENCES ABOUT ACCENTURE LABS 1 Gartner, The Evolving Landscape of Blockchain Technology Accenture Labs incubates and prototypes new Platforms, Ray Valdes, David Furlonger and Rajesh concepts through applied R&D projects that are Kandaswamy, March 2017, accessed 18 April 2017, https:// www. gartner.com/doc/3626317/evolving-landscape- expected to have a signi昀椀cant strategic impact blockchain-technology-platforms on clients’ businesses. Our dedicated team of technologists and researchers work with leaders AUTHORS across the company to invest in, incubate and deliver breakthrough ideas and solutions that David Treat help our clients create new sources of business Managing Director, Global Blockchain Lead advantage. Accenture Labs is located in seven key Dave has driven Accenture’s blockchain practice research hubs around the world: Silicon Valley, globally, engaging clients in all industries from CA; Sophia Antipolis, France; Arlington, Virginia; pure R&D to full scale transformation. Beijing, China; Bangalore, India; Herzliya, Israel and Dublin, Ireland. The Labs collaborates extensively Giuseppe Giordano with Accenture’s network of nearly 400 innovation Accenture Labs Blockchain Lead centers, studios and centers of excellence located in 92 cities and 35 countries globally to deliver An experienced engineering leader Giuseppe cutting-edge research, insights and solutions leverages innovative technologies like blockchain to clients where they operate and live. For more to craft client solutions. information, please visit www.accenture.com/labs. Luca Schiatti Technology R&D Associate Principal ABOUT ACCENTURE Luca guides the blockchain development Accenture is a leading global professional environment and leads the creation of services company, providing a broad range of demonstrations and client projects. services and solutions in strategy, consulting, Hugo Borne-Pons digital, technology and operations. Combining Blockchain Technology R&D Analyst unmatched experience and specialized skills Specializing in researching future technologies across more than 40 industries and all business like blockchain, Hugo develops leading-edge functions—underpinned by the world’s largest evaluations for clients delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. With 459,000 people serving clients in more than 120 countries, Accenture drives innovation to improve the way the world works and lives. Visit us at www.accenture.com. Copyright © 2018 Accenture All rights reserved. Accenture, its logo, and New Applied Now are trademarks of Accenture. 181854