IBC is to blockchains what TCP/IP was to the internet
The internet didn't become the internet simply because we decided to connect a bunch of computers together. It became the internet when we agreed on a common way for computers (or rather networks of computers) to talk to each other. Think of it as a shared set of standards which made everything that followed possible.
Institutions adopting distributed ledger technology today are running into the same situation. It's what I can only describe as an "eerily familiar" situation. We have these powerful ledgers, but just like sending emails to yourself is not very useful, sending money only within your own ledger is quite limited. So, being able to interoperate with other networks has become a baseline requirement.
But because we have thought of ledger technology as a token technology, the instinct has been to build token bridges. It’s like trying to make email the underlying transfer protocol for the internet. This will work for the explicit use cases you design it for. But, in the long run, this won’t scale, and it won’t be flexible enough to support the requirements of banks and institutions as they come on-chain.
Their priorities are deeply complex, with concerns around security, privacy, compliance, and of course, their actual business needs. What institutions actually need is the same thing the internet needed: an open, extensible protocol layer that allows you to build anything on top of it.
Often when I hear people talk about interoperability, they are talking about “moving” something: a token, an asset, some value. I think there is a more powerful (and interesting!) way to frame this. Just like emails copy and transfer information from one point to another on the internet, ledger interoperability works the same way. You’re copying information into a message and transferring it.
If we take the example of a token transfer, in its most basic form, it’s just updating account balances on the source ledger, sending a message with instructions, and then updating the balances on the receiving ledger. Combine this with a way to prove the message state on each end, and you get a token bridge.
A token bridge typically hardcodes the exact rules of how to do this. A general-purpose interoperability standard lets you set the rules on how messages are defined, processed, and verified. A token bridge is just one implementation of this.
Thinking about ledger interoperability in terms of packets and messages is more complex than “moving tokens”, but it’s the right foundation. It lets ledgers take advantage of the same flexibility and composability that the internet has had for the last 40 years. From this foundation, you can build and coordinate anything across any connected entity and network.
In order to accomplish that, technical leaders at banks and institutions need to coordinate around a set of common standards with the right core primitives that support the applications built so far, the newer institutional use cases, and any future applications we haven’t even imagined yet.
That is why IBC, the Inter-Blockchain Communication Protocol, is the right abstraction for where institutional adoption is headed: banks and financial institutions need basic plumbing that everyone can rely on.
There is no point trying to standardize every future application in advance. We cannot. Tokenized deposits, regulated stablecoins, securities settlement, DvP, PvP, and whatever comes next will all have different rules, safeguards, and governance requirements.
What we can standardize is the layer underneath: how independent ledgers can pass verifiable messages and coordinate without being limited by a fixed protocol, forced to trust intermediaries, or beholden to a gatekeeper who can raise fees or shut it down at will.
That is the lesson we can take from the internet and TCP/IP: the internet's base protocol needed a common way for networks to talk, with enough flexibility built in. Email, browsers, streaming, payments, or social networks all came later, without any of it being predicted in advance.
IBC gives blockchains that same kind of foundation. A secure, open, general-purpose messaging layer that institutions can use today, and still trust that it can handle the rapid pace of technological advances.
There isn’t a single thing that makes IBC the natural standard for ledger interoperability. It is a combination of the standard's open nature and design choices that build security and flexibility into it (rather than tacking them on as an afterthought).
IBC is not a bridge only for today's token transfer, but a standard layer for tomorrow's financial workflows that banks and institutions will need to run across networks.
About the author
Gjermund Garaba is a Staff Software Engineer at Cosmos, where he leads work on IBC across the full stack, from on-chain protocol to infrastructure. With a background spanning engineering management, team leadership, and hands-on development in Go, Rust, and Solidity, he brings both technical depth and cross-functional range to distributed systems and cryptography. He's motivated by one thing: using technology to make life better for institutions and banks.
