The Role of the IWA in the Standardization Landscape

The InterWork Alliance is a non-profit industry organization formed to democratize the digital interchange of value and improve interworking amongst disparate business infrastructures. There are so many challenges to be resolved in this space – transaction speed, efficiency, identity, data protection, regulatory trust, to name a few – and we believe that the best approach is based upon the standardized representation of any asset of value (physical, digital, or conceptual) as digital tokens that works for any established or new use cases. 

This may sound a bit familiar. In fact, one of the first questions we are often asked about our new organization is how we are different and unique from other organizations and not just another attempt at something that has been tried before. 

In this post, I’d like to clarify our role and relationship with other organizations that populate the standardization landscape. Let’s start with a perspective shared by IWA chair Marley Gray in his blog post introducing the IWA: 

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.

The IWA is purposely technology-neutral and technical implementations of IWA standards are not dependent on blockchains, or more generally Distributed Ledger Technology (DLT). However, it remains likely that many IWA-defined tokens will reside on a blockchain/DLT platform – so it’s an instructive exercise to look at the role of the IWA in light of the blockchain/DLT standardization landscape. 

The blockchain background 

In 2009, Bitcoin was launched as a peer-to-peer electronic cash platform. In 2015, programmable blockchain projects such as Ethereum, Hyperledger Fabric, and R3 Corda were launched. Over the last decade, Blockchain/DLT has evolved to encompass a collection of distributed computer network architectures implementing various decentralized consensus protocols. The application of blockchain/DLT spans a broad range of areas including finance, supply chain, Internet of Things (IoT), energy, healthcare, pharma, transportation, insurance, government, and more.  

Beginning in 2019, Forbes started publishing its Blockchain 50 list of enterprises embracing Blockchain/DLT. Government blockchain initiatives such as the European Blockchain Services Infrastructure (EBSI) and China National Blockchain Initiative are shaping the adoption of blockchain/DLT for government services. The United Nations (UN) currently has five active blockchain projects to facilitate inter-agency cooperation and help achieve their Sustainable Development Goals (SDGs). The field of Blockchain/DLT has reached a certain level of maturity such that standardization is extremely critical for adoption. 

The standardization landscape 

Blockchain/DLT is like a toolbox with many tools, each tool being a different architectural representation. Some of these ‘tools’ are general-purpose, being applicable to many different use cases, and others are optimized to serve a subset of use cases. With such a wide vertical as well as horizontal impact, it is quite challenging to develop standards for such a complex field supporting a diverse set of applications. 

Fortunately, there is a very robust set of organizations that are working on blockchain/DLT standards and/or related industry support. We can generally group these into those that focus on driving technology innovation, and those that focus on market innovation. 

Technology Innovation 

• International, regional, and national standards development organizations (SDOs). Public or private organizations that operate under strict guidelines for the purpose of publishing high-quality industry standards to facilitate the adoption of new technologies. Some are royalty-based, others royalty-free. 
• Open standards organizations and Open Source Software (OSS) communities. Usually not-for-profit, they perform technical work, governance, hosting, and promotion of free and open-source software projects developed collaboratively by their members. Note that OSS organizations are not standards organizations due to the nature of Open Source Licensing model. 

Market Innovation 

• Industry alliances, associations, and consortia. Founded and funded by businesses that operate in a specific industry. Some focus on collaboration, setting standards, and certifying products upon approved market requirements and performance metrics based upon technology innovation. Others focus on creating a more inclusive business environment that will incentivize technology innovation and investment, which includes education, in-depth technology and market research, and advocacy with policymakers, regulators, and industry. 

A small sampling of organizations that have a hand in the blockchain/DLT space follows: 

The IWA is  focused on producing market-driven standards for tokenization of business use cases – expressed through our Token Taxonomy Framework (TTF). These standards can be applied to blockchain/DLT as well as other technologies. So what is the IWA role here, and how is it different from SDOs and technology innovation enterprises/organizations? 

In a multi-stakeholder ecosystem, the most successful transitions from technology innovation to commercial market adoption occurs when key market makers voluntarily collaborate on empowering this innovation to build out a global ecosystem. This collaboration usually takes the form of an industry organization such as an alliance, association or consortium that understands how to introduce the technology to the world and ensure that it works and can be trusted by the average consumer. 

As an industry organization, the IWA does not interfere with the technical work being done by standards development bodies, open source standards organizations, or software communities. And it is not focused on one single technology or industry use case, so it does not interfere with or is a threat to work being done by vertical-driven industry groups. 

By focusing on a common way to define market innovation of digital interchange across all technologies and across all use cases, the IWA is uniquely positioned to establish mass global adoption of industry use cases that will interwork across all market segments. 

A key element to making this work is ensuring that what we do is consistent with and informs the output of all the other associations with interests in this spectrum. To this end, we strategically associate and liaison with these organizations on a regular basis for the purpose of encouraging the use of a common technology-neutral taxonomy that we are working to impart to the global ecosystem (please see the Associate Members list for a current view). 

The first challenge to standardization: interoperability 

All of these organizations and communities have common goals to develop standards on terminology, taxonomy, smart contracts, privacy, identity, security, interoperability, governance, reference architecture, etc. However, the current challenge in this field is the development of competing and/or overlapping standards that may be specific to a market segment. For example, in a small sampling of current efforts, we see three separate ongoing efforts on the topic of interoperability and governance. A more comprehensive study would reveal significantly more areas of overlap. 

In addition, these organizations operate under different organizational structures, different membership models, and different governing directives. This lack of harmony does not help drive market adoption or avoid fragmentation.       

The second challenge to standardization: property rights 

The blockchain field originally evolved from the OSS communities, which are focused on the contribution of code under open source licenses. Open standards are specifications that are made publicly available to any person or organization, free of cost. Intellectual Property Rights (IPR) is an important aspect of industry alliances and consortia that develop specifications and tools with contributions from participating industry members. One of the biggest challenges facing the blockchain/DLT standardization is the evolution, conflict, and blurring of boundaries between open source, open standards, and IPR. A recent study by the European Commission published key findings and recommendations for collaboration among these communities. 

Mass adoption of any emerging market requires its users to feel safe that they will not be impacted by unforeseen IPR challenges in the future. Without such reconciliation, adoption is stifled. 

The IWA resolves these current challenges 

The IWA intentionally focused on interworking, vs interoperability, to remain at ‘arm’s length’ from the efforts of those organizations tackling the technology of interoperability. Interworking is much more of a business alignment; by first ensuring that all businesses commonly agree on a set of standards for expressing use cases in terms of the interchange of tokenized value, the concepts of platform choice and interoperability are deferred to later in the decision making process. 

With respect to IPR, the IWA operates under a modern model and terms that allow our members to efficiently work together in a collaborative environment to provide contributions to the overall goals of the Alliance. 

Concluding remarks 

The IWA has a strong interest in working with other organizations and communities to help drive global interworking and develop common frameworks for business exchange regardless of the market segment. Although we do not work on technical advancement, our focus on business use cases helps to inform those working on technology standards and open-source code what businesses actually need, and provides a strong setting for a more focused set of technology-based initiatives to serve this market. And our standards frameworks allow for developers to select credible technology solutions that would meet the market requirements and performance metrics of an IWA approved Token Framework definition.  

If you are involved in advancing the tokenized interchange of value, as a technology producer, consumer, or standards-setter, we invite you to join the IWA to help us drive mass market adoption.