On Tuesday, the InterWork Alliance (IWA) formally launched operations as a platform-neutral, non-profit organization dedicated to creating the standards frameworks needed to increase innovation across token-enabled ecosystems. The new organization already has 36 members, including tech firms such as Accenture, IBM, and Microsoft; banking and exchange firms ING, Nasdaq, SDX, and UBS; and, blockchain companies Digital Asset, Neo Global Development, Hedera Hashgraph and R3.
“Companies want to be able to create token-based business models without having a platform technology in mind. For this approach to work, standards are urgently needed around defining what a token is and how its contractual behaviors will work,” said InterWork Alliance President Ron Resnick.
The InterWork Alliance Chairman, Marley Gray, the Principal Architect for Microsoft, noted in his blog post, “The modern concept of tokenized value is not new – it first came from the blockchain space and is (unfortunately) very often thought of in terms of cryptocurrency due to the early Bitcoin and Ethereum blockchain networks. But it was pretty clear to us that there’s no need to tie tokens to blockchains, and that blockchain is really just the first step in what is a much larger, more ambitious approach to looking at how organizations work together.”
I had the opportunity to ask Gray several questions to help inform my readers of what the intentions of the ‘InterWork Alliance’ are with respect to crypto and blockchain. My three key takeaways were learning what ‘Interworking’ is, that the IWA seeks to standardize ‘tokens’, and that the new term of 2020 for enterprise blockchain may now be ‘Multi-Party Systems.’
Jason Brett: What is a token? Is it defined by cryptocurrencies?
Marley Gray: While the term ‘token’ has gone mainstream due to cryptocurrencies associated with the Bitcoin and Ethereum networks, a very important concept to remember is a token’s value does not have to equate to something financial, like money or cryptocurrencies. Rather, a token’s value can refer to any item (physical or digital-native), or inventory unit, or even a ‘concept’ that moves across a supply chain to track progress. The IWA will examine the digitization of tokens, which includes a definition of their behaviors and characteristics. This certainly includes the definition of cryptocurrencies, but extends to include additional forms of token value.
Bitcoin and Ethereum are home to so many tokenized assets, and it makes perfect sense for organizations operating in these spaces to join the IWA to help bring the benefits of standards back to these communities. IWA already includes members who deliver tokenized products and services into the Ethereum space and we welcome others to participate whenever they see fit.
Brett: What is interworking?
Gray: The IWA defines interworking as ‘the state or an instance of two or more things working with or being made to work with each other.’ By standardizing how token and values are defined in models and contracts, the IWA will foster the ‘interworking’ needed to drive widespread adoption of tokenization – from carbon credits to movie tickets and more.
Brett: Is IWA unique in its approach?
Gray: There are many different areas of focus that are required in establishing markets for token-powered distributed applications. Organizations exist that focus on business-oriented standards, technology-standards, open-source implementations, specific industry vertical problems, regulatory oversight – all are important, and all are complementary in contributing towards a single overall objective. The IWA takes on a role that has not been addressed by other organizations to date and is pleased that so many organizations have joined us as founding members, including:
Launch members: Accenture, Amerdata, Blockchain Technology Partners, Calastone, Chainlink, DEKRA, Digital Asset, DLA Piper, The Depository Trust & Clearing Corporation (DTCC), Envision Blockchain, HACERA, Hedera Hashgraph, IBM, ING, Microsoft, Nasdaq, Neo Global Development, R3, SIX Digital Exchange (SDX), Tokensoft, UBS, Web3 Labs, and others.
Associate members: 2Tokens, Blockchain Research Institute, British Blockchain Association (BBA), Cloud Security Alliance, DID Alliance, Global Blockchain Business Council (GBBC), Global Digital Finance (GDF), Hyderabad Blockchain District, Hyperledger, International Token Standardization Association (ITSA), Washington Technology Industry Association (WTIA) Cascadia Blockchain Council and others.
Brett: What does the IWA mean by a multi-party system?
Gray: The IWA’s use of the term multi-party is at the business level. The term “multi-party” refers to the expression of two or more entities looking to have an interchange using some item of value. It could be me looking to buy a concert ticket from a vendor, or a complex relationship of players managing the shipment of cargo from one point to another. The IWA’s view of multi-party is at that level, not a technology level.
Once the IWA’s standards are used to tokenize the item of value and help define the contractual relationships around that, the implementation might be a blockchain environment, permissioned or not, where the parties can agree to share one or more ledgers. But it could also involve traditional databases or other common resources like ERP and traditional business systems. Many people do view a shared ledger, which may or may not be a “blockchain,” as the foundation for building variable trust multi-party applications – but the actual implementation is not within the scope of the IWA. The IWA will focus entirely on the multi-party values and agreements at the definition level.
Brett: Tokenization has been a challenge in the marketplace. What is needed to advance?
Gray: The availability or type of platform choice isn’t the issue. Like all technology eras, organizations want to produce business processes that can then be passed off to coders for implementation on all the platforms their customers are on. This may be a blockchain platform or something else (such as a distributed database). By focusing on business needs first and then addressing how each platform will connect to a business’ database-oriented business systems, the InterWork Alliance is taking a different and unique approach. We are allowing organizations to describe their core business processes in a neutral way, without committing to a technology platform as the first step. By developing technology-neutral standards, this approach allows the tokenization problem to be addressed at the higher, business-process level, and then work with developers on the needs of each platform. It’s much easier to gain consensus on building tokens from standard, composite parts – and contracts from standard-based composite clauses – when they precisely define the business processes rather than a specific platform. When platform choice is not a concern, interworking agreements are easier to reach.
Brett: How will interoperability eventually be achieved?
Gray: The IWA is focused on business-level interworking, ensuring that the definition of tokens and the contractual clauses that operate over them have a common taxonomy and standardization across all verticals and use cases. This ensures that from a business point of view, we will be able to certify that products built on the IWA’s standards will be able to work together from the sense of inputs and outputs being clearly understood and aligned. Since the IWA is technology-neutral, we will not be focusing on standardization at the platform level, which makes it very important that the providers working on platform interoperability help to ensure that there are strong connections between the IWA’s business-level standards and the interoperability code and products that they are producing. We view the IWA’s objectives as complementary to theirs and encourage all to join the IWA and participate in setting the business level standards that will ultimately drive down on their work.
Brett: Moving forward, what is the overall goal of IWA?
Gray: As the IWA is a member-led organization, the full scope and impact of our framework use cases will be developed over time. In initial conversations with launch members, we envision working groups forming, upfront, to focus on sustainability (emissions control, carbon offsets, trade contracts, etc.), trade finance, derivatives (commodities, etc.), security, and supply chain (bill of lading, track, and trace, etc.). Where the IWA heads moving forward will be entirely dependent on the members who join and the use cases of most interest to them. Our management team strives to ensure that the membership is balanced across as many diverse use cases as possible and includes both the technology providers and consumers.
Brett: What does the IWA hope to achieve over the next few years?
Gray: In the future, users will be able to buy, sell, and exchange everything using tokens from climate change-based carbon accounting and markets to plane tickets to real estate. Today that future can’t happen. Businesses are unable to roll out token solutions much less agree on what a digital asset or token is across any platform, meaning they can never reach all their potential customers. Without a standardized set of common terms, definitions and business level specifications, developers have to interpret inconsistent business requirements and translate them to write code for every blockchain platform and each token standard for a token-based business use case to work. This complexity makes wide-scale adoption difficult. The IWA will examine how to simplify tokenization, how contracts interact with them and a common data schema for analytics to understand and improve on the underlying ecosystem over time.
Brett: Can you provide some examples of how you’ll work together?
Gray: The IWA will lay the important groundwork, based on real-world customer use cases and requirements, working to create a common set of token frameworks, including:
● The Token Taxonomy Framework (TTF): provides a common language and toolset that enables multiple parties to agree on the definition of a token and how its value can be exchanged or used. As a starting point for the IWA’s work, we looked at a wide variety of existing tokens and found that they all shared many of the same elements – just described in different ways. By identifying the common ground for describing a token’s shared value represented digitally, we were able to build out a common taxonomy and composition framework. The framework provides organizations with an easy way to describe the value that they want to tokenize. The TTF is this composition framework, and it allows business-oriented people to define a new token by composing the relevant behaviors and attributes exchange from the TTF catalog, which is always expanding as new needs are uncovered.
● The InterWork Framework: allows businesses to compose multi-party contracts from clauses that directly correlate to the token standards, enabling communication protocols to be defined and connected to framework components regardless of the eventual technology deployment. TTF token definitions contain a set of programmatic ‘hooks’ – think of them as placeholders – that link to the next level up in the IWA’s standards stack, where multi-party contracts or agreements are defined. The IWA’s next set of standards will focus on standardizing the contractual clauses that will push down on those hooks – producing a world where there’s a collection of universally agreed-to clauses that are all designed to work with the agreed-to definition of value reflected by the underlying tokens.
● The Analytics Framework: enables organizations to derive additional business value from a privacy-preserving analysis of multi-party contracts, and shared data schema for value-add AI services and market-driven data reporting. As customers move from multi-party transactions towards multi-party contracts, they find they have a lot of “linked” data generated by these systems – and it would be really valuable if that data could be shared with contractual partners to perform some multi-party AI over it. The IWA’s final set of standards will focus on how to find a way of agreeing on a multi-party shared schema for these multi-party analytical workloads. For example, envision a set of value-added multi-party analytics on top of the core trusted infrastructure where multiple parties can share or pool data to gain insights that would ordinarily be left undiscovered. We can clearly see a future for highly efficient cross-industry, cross-organization contracts that have access to lots of data that could be reasoned over to further streamline and optimize business processes across organizations. This might lead to new breakthroughs – perhaps in a medical field, finding inefficiencies in the supply chain, or addressing sustainability challenges.
Brett: Can you provide an example of a use case?
Gray: A good use case to envision the value of IWA standardized, composable frameworks is in the area of global carbon mitigation. There is already a huge amount of money being spent on carbon markets, ‘greening,’ and reporting – despite the lack of any consistent or coherent solution to the implementing and accounting of global carbon mitigation agreements.
Think back to the earlier example of diverse supply chains and how difficult it is to gain cross-chain traction with a platform-up approach. With global carbon mitigation, virtually every entity on planet earth will be participating in a single system designed to incentivize change, track implementation, deliver global accounting, and be fraud-proof. Imagine trying to build such a system from the platform up! The United Nations Framework Convention on Climate Change (UNFCCC) has not been able to close any negotiation on how this is to be done.
Brett: What is a tokenized ecosystem?
Gray: Any expression of value in any vertical or use case can be rendered as a token. Cryptocurrencies are only one of many types of tokens and it’s the interaction of multiple parties across these tokenized value points that creates this sense of a tokenized ecosystem. But we can still develop a set of siloed token ecosystems if each attempt to tokenize value is addressed differently from a definition point of view. When token definitions are built to IWA standards, these can eventually be rendered into whatever the most relevant technology may be – which certainly is inclusive of blockchain and distributed ledger technology.
Enterprises, governments, entrepreneurs and regulators urgently need a common language to understand the digitization of assets if we are to realize the new promise of the digital economy. The IWA will examine ways tokens can be applied across a wide variety of markets and any industry that values some collaboration among competing entities. The broad coalition of organizations that are part of this Initiative signals the strong commitment of the global enterprise community to come together around tokenization.