Discussion Post: Technological Revolutions and the Cross-Chain Interoperability Protocol (CCIP)

Interoperability is the cornerstone of all technological revolutions. It allows technologies to grow, spread and gain universal adoption.

Here, I explore how interoperability shaped a technological revolution of the past to understand how it will shape the blockchain revolution of the through discussing a key technology which enabled railroad interoperability and compare it to the Cross-Chain Interoperability Protocol (CCIP) which will enable blockchain interoperability.

The Standard Gauge and Railroad Interoperability

In 1826, railway construction exploded in the United States in a piecemeal fashion. In Massachusetts, Ohio and New York, railways were developed mostly to transport materials within states and by the 1830s, began to transport passengers.

In these and other northern U.S. states, rail cars were initially pulled by animals such as horses. South Carolina, however, broke with this tradition in 1830 and was the first state in the US to operate steam locomotives, a new technology at the time that was first developed by British engineers.

Over time, railways expanded and locomotives became cheaper to build, increasing the desire to ship materials and passengers over longer distances. However, major obstacles prevented widespread adoption of railroads, the most important of which was the difference in the railway gauge, the distance between railroad tracks, between regions in the U.S…

While most Northern and Midwestern states adopted what is now known as the “standard gauge” for their tracks which is 4’8 ½”, Southern states east of Mississippi adopted a wider 5’ gauge and Southern states west of Mississippi, as well as Maine and southern Canada adopted 5’6” gauge.

This created “Common-Gauge Regions,” shown in the figure above, which restricted all rail travel only between contiguous states that had a common gauge. The solution to this was the standardization of Southern tracks to standard gauge after the Civil War which had a tremendous impact on how goods and services were transported between Northern and Southern states.

Thus before the gauge change, ships were used to transport goods between Northern and Southern U.S. states, after the gauge change railways quickly became the exclusive mode of shipping and transportation. After this time, specialized tools were developed to quickly change gauges and in the present day, newer trains are explicitly designed to operate across any gauges.

Through standardization and the technologies that enabled it, incredible railway transportation systems such as the Transcontinental Railroad which connected the east and west coasts in the U.S. and other massive railway systems in Russia and China could be developed. Today the U.S., Russia and China have a total of 149,407 km, 146,300 km and 85,600 km, respectively, of track. To get a sense of how immense this is, the circumference of the Earth is only about 40,000 km, so each country has enough track to wrap around the Earth about 3 times!

Cross-Chain Interoperability Protocol (CCIP) can be the blockchain “standard gauge”

One lesson that can be learned from the gauge change during the early days of American railroads is that technology that fosters interoperability increases the usefulness and adoption of those systems.

In the blockchain space, a technology that allows for cross-chain transfer of information in a standardized manner could have a similar impact, allowing for the free flow of information across blockchains that can facilitate a limitless number of use cases for blockchain applications. This is what the Cross-Chain Interoperability Protocol (CCIP) seeks to accomplish.

The CCIP is “a new open-source standard for cross chain communication" which can connect both private and public blockchain networks. What makes this possible is a large network of node operators that can provide the means through which information can be transferred from one blockchain to another.

One of the unique features of the CCIP is a technology stack which connects blockchains via an open-source programmable token bridge that can span any blockchain network. Thus, even permissionless blockchains such as central bank digital currencies (CBDCs) can be linked via the programmable token bridge to permissionless, decentralized blockchains and smart contracts to provide a limitless set of use cases between individuals, governments and financial institutions.

These include: cross-chain collateralized loans, cross-chain yield aggregators and eventually any service that requires data exchange between blockchains not limited to voter registration, acquisition of state and federal government identification, welfare services etc. At the present time Celsius, a CeFi platform is planning to use CCIP as a major part of its yield generation activities involving accessing funds across blockchains.

Because CCIP has the potential to connect any application using a blockchain, CCIP may be the new “standard gauge” for blockchain technology, accelerating the international adoption of smart contracts and cryptocurrency by governments, financial institutions and individuals across the world.