Going Beyond Blockchain, Pt. 1: Enabling Scalability for the Future


Modern payments infrastructure must ensure scalability for the global demands of today, tomorrow and beyond. Image: Shutterstock

Much of the buzz around the impact of the Internet of Things (IoT) has been about the IT challenges of scaling to such massive volumes of data. After all, Gartner estimates that 20.8 billion devices will be connected by 2020, ushering in the era of the zettabyte as global IP traffic exponentially rises.

As the conversation about the IoT evolves from horizontal to vertical applications, the financial services industry is acknowledging that the IoT cannot be fully realized unless the scalability limitations of today’s payment networks are addressed. It’s clear that the Internet of Things cannot be achieved without the Internet of Value.

Global payment demands aren’t just increasing, they are also rapidly changing. Increasingly, retail and corporate customers are requesting the need to send international low-value payments on demand and in real time across a variety of networks with absolute certainty.

Consider the new corporates, like Amazon, Uber and Facebook. These digitally native businesses are global from day one, operating on a platform business model that connects distributed networks of suppliers and customers.

Their success depends upon on-demand fulfillment, but today’s infrastructure does not make real-time cross-border payments possible. As a result, banks are facing competitive pressures from alternative payment providers like Paypal and Alipay.

Banks need a better approach to accommodate evolving demands in payments and beyond. Think about the future world of trade finance, securities or lending. No single system or blockchain can accommodate these diverse sets of use cases or global needs.

Put simply, financial institutions need a modern infrastructure that interoperates networks to better serve their clients on a global scale.

To achieve the ultimate global transaction network, one akin to the World Wide Web, Ripple advocates for the Interledger Protocol (ILP). Ripple’s implementation of ILP connects bank and non-traditional payment networks to make sending payments just as easy as sending emails. In other words, ILP is the key technology to enable the Internet of Value.

At its core, Interledger is a web protocol for routing payments across independent networks, a technology which has never existed before. It ensures the payment speed and certainty necessary to service high volumes of all sizes and types of payments, while making them cost-effective for customers and profitable for banks.

ILP provides the same benefits as other blockchain systems, including the certainty and auditability of transactions, but adds unbounded scalability with no limits to transaction processing to meet customer demand.

All banks and payment providers — from the smallest to the largest — can leverage Interledger’s open protocol to power payments across networks globally. The Interledger Protocol can work with any new network or system, regardless of its underlying technology.

No single network, system or blockchain can support the world’s transactions anymore than a single database could run the Internet. Now is the time to see what the principles and design of the Internet can do for commerce and money. This is the vision of the Internet of Value, and the Interledger Protocol is the foundational block that will make it possible.

Contact us to learn how your institution can become ILP enabled, and stay tuned to Ripple Insights for part two of this story on why transaction privacy is crucial to going beyond blockchain.