Exactly how does one go about changing the world?
“Our greatest hopes could become reality in the future. With the technology at our disposal, the possibilities are unbounded.”
― Stephen Hawking
I’ve been driving Microsoft’s blockchain strategy for the cloud even before blockchain became ‘a thing’, and it’s become very clear to me over the last year or so that our customers really want to step back and re-evaluate exactly what they’re trying to do in this space. Based on the number of quality organizations that immediately said ‘yes’ to our pitch to form a new industry organization targeting this shift, I know that it’s not just me hearing this desire for a change in approach. That message is resonating throughout the technology industry.
Organizations of all stripes want to do something more meaningful than just simple transactional blockchain workloads. They want to really transform the way they do business, and are starting to express this in the form of a new category of applications called ‘multi-party’ – a category that is not limited to individual platform options, eliminates any sort of hard dependencies, and is open to cloud deployments so that they have freedom of choice.
They are certainly fed up with modeling their business processes around a technical implementation that may or may not meet their actual needs. You often see companies get into trouble as they pick a technology platform for a business process and then have to augment that process to map it onto that technology platform. Over time this disconnect leads to tremendous inefficiencies because they compromised their core business to suit the needs of a technology.
What they really need, is to be able to describe their core business processes in a neutral way, a way that does not isolate them or make them feel like they’re on an island. It’s a business-down, rather than technology-up, approach that no-one is doing in any sort of consistent way. We started the InterWork Alliance – IWA – as a platform-neutral body in order to create the specifications needed to bring about this sea change in how business processes become digitized. Making this happen requires a broad and deep collaboration between private sector organizations (large and small, technology providers and consumers), governments, academics, and civil society at large that share this vision and are willing to work together to make this happen. This is the IWA!
Business change starts with tokens, and tokens are so much more than a blockchain
“Begin at the beginning,” the King said, very gravely, “and go on till you come to the end: then stop.”
― Lewis Carroll, Alice in Wonderland
Although the IWA has only recently launched, it builds on a strong body of work from the former Token Taxonomy Initiative (now absorbed into the IWA) – a standardized set of basic terminologies that allow us to have discussions across organizations and across institutions using the same language with reference points so we can make progress. Our work began at the most basic level, finding common ground for describing shared value that is represented on some sort of shared medium (whatever that may be; we don’t care) so that organizations have a way to exchange value point-to-point. With this common taxonomy in hand we were able to build a composition framework – the Token Taxonomy Framework (TTF) – from which we can create specifications.
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.
A very important concept to understand is that value does not equate to cryptocurrencies. It does not even have to equate to something financial, like money – any item (physical or digital-native), or inventory unit, or even a ‘concept’ that moves across a supply chain to track progress is value that can be represented by the TTF.
A part of our low-level agreements on how we represent value includes a set of programmatic ‘hooks’ – think of them as placeholders – that link to the next level up in our stack: where multi-party contracts or agreements (there’s a whole host of terms for these, pick your favorite) are defined.
Before we tackle that layer keep in mind that, essentially, tokens are designed to be interchangeable within their own classes and used by most participants on a network. Sitting above the tokens, the contracts represent agreements between organizations (potentially private or perhaps with regulatory oversight in the industry), and those contracts need to be able to use a standard interface to the value underneath.
When two or more things just work with each other
“I wish to be cremated. One tenth of my ashes shall be given to my agent, as written in our contract.”
– Groucho Marx
Interworking is defined by Merriam-Webster as “the state or an instance of two or more things working with or being made to work with each other” – and our InterWork Alliance was formed to bring this definition to life in the token-powered space. Coming to agreement on how we represent value as tokens is just the first step in making this happen; we now have to agree on how we write contracts over those tokens.
Important point: we are not talking about standardizing contracts! That’s a pretty impossible goal, as contracts are almost universally unique instruments. Certainly, nobody really writes contracts from scratch, but they pull out a template of something that’s similar and then scratch out some clauses, edit others, and add in new ones to get to the point that results in a contract that satisfies negotiation. It’s those clauses that can be standardized – think of 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. Clauses that match ‘insurable’, ‘transferrable’, ‘compliant’, and all of the different behaviors and property sets that we have defined in the TTF. There may be a dozen ‘insurable’ clauses to choose from, you just pick the one you want (or add a new one to the collection), and everything just works because all clauses are standardized to interact with the tokens in exactly the same way. Contract definitions are as composable as token definitions.
For example, let’s say that the owner of a tokenized asset has marked that asset with the ‘insurable’ behavior. We don’t want to or need to know anything about the terms and conditions of an insurance contract covering that asset – that’s between the owner of the asset and the company insuring it. Rather, we do want to define the process for that insurance contract to be able to properly connect to the underlying asset and make it an insured token. A token with the ‘insurable’ behavior can be queried to prove that it is insured without having to produce any details of the underlying contract, as long as the contract contains a standard ‘insurable’ clause.
Building up composition frameworks around agreed-to definitions of value and agreed-to contractual clauses that interact with those definitions – that’s the basic concept of the IWA! Our work crosses all industries and sets the stage for tremendous new business opportunities. In my next blog post I’ll discuss some of these ramifications… in the meantime, scroll to the bottom of this page and subscribe to our mailing list to be sure you don’t miss any information!