2023 New Value Report

Wired: A Global Standard for Payments

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The mission to connect the ledgers of the world. Photo: Shutterstock/Funny Solution Studio

Wired has a great piece on the Interledger Protocol (ILP), a protocol for transferring value between any two ledgers.

You should be paying attention to developments like ILP if you, like Microsoft’s Marley Gray, believe in a value system that looks a lot like the Internet does today. Instead of having one single ledger—like everyone logging on to AOL—you have lots of different ledgers all interconnected together.

As Marley explained in a lengthy and illuminating interview with Ripple Insights:

Because this is just the beginning. Right now we have Bitcoin, which is this public network. There will be people out there who will tell you that you need to be on the Bitcoin blockchain. We disagree. For a couple of reasons, we don’t really see it going anywhere. But Bitcoin served an important purpose. It proved that the technology can work. But it’s just one chain. We’re barely scratching the surface.

In financial services, I think we’re going to see a mixture of different blockchain technologies. There will be many, many chains—chains for swaps, chains for bonds. They’ll each have different characteristics. We’ll see chain patterns evolve. You could plug and play various consensus algorithms based on the products that exist on that chain.

Having lots of different ledgers—or chains, as Marley calls them—is great and all, but only if we have a universal language so separate ledgers can seamlessly understand each other.

That’s where ILP comes in. ILP is “a movement to create a technology that would let all these online ledgers talk to one another, that would let you send money between these systems,” Wired’s Cade Metz explains. Or as Ripple CTO Stefan Thomas puts it, “We’re trying to create a global standard for payments.”

Over at the World Wide Web Consortium (W3C), the international organization founded and led by Tim Berners-Lee that set standards for protocols like HTTP, the W3C Interledger Community Group is already 120 members strong. Members include some of the world’s biggest banks, central banks, various financial institutions and technology companies. The vision for a multi-ledger future is clearly resonating.

So much that Microsoft is already working to include ILP offerings as part of its Azure cloud services where it offers Blockchain as a Service (BaaS).

Such is the critical nature of a standardized protocol facilitating payments across payment networks, Marley believes that ILP will become part of the very “fabric of this multi-chain reality” and the burgeoning Internet of Value.

And as Cade duly notes, much of this is a continuation of the good work done by architects of the early Internet of Information. In fact, they shared the same vision; they just never got to it.

In a way, the project is the apotheosis of a decades-long effort to create what you might call “an Internet for money.” Back in the early ’90s, people like Marc Andreessen, the creator of the Netscape web browser, hoped to create an standard way of sending money across the web. The original hypertext transfer protocol—http, the standard that defined the underpinnings of the web—actually included a code for payments.

Read Cade Metz’s full Wired report here.

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