Interledger: How to Interconnect All Blockchains and Value Networks

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Interledger was born from a vision to create a blockchain-agnostic platform for smart contracts. The driving challenge? Neutrality. How can decentralized applications (dApps) purchase essential resources like computing power or cloud storage without locking into a single blockchain or cryptocurrency? Beyond the crypto world, countless online services struggle with monetization—trapped between relying on centralized platforms like Apple, PayPal, or Visa, or building complex payment integrations from scratch.

Interledger answers a bold question:

What would a universal, open network for transferring value—free from corporate control or currency dependence—actually look like?

The answer is not only conceptual—it's live. Finalized in late 2017, the Interledger Protocol (ILP) is now operational, enabling trustless cross-currency transactions and pioneering new models such as streaming micropayments. This article explores how ILP connects disparate ledgers, its core technical innovations, and its growing ecosystem—painting a picture of a truly interoperable financial future.

A Decentralized Network of Value Exchanges

At its core, Interledger operates as a distributed network of connectors—independent entities that function like decentralized exchanges or market makers. These connectors facilitate the movement of value across cryptocurrencies, fiat currencies, and tokenized assets without requiring users to migrate funds to centralized platforms.

Crucially, Interledger has no central authority. It isn’t tied to any specific blockchain, token, or corporate entity. This neutrality allows users to transact natively on their preferred ledger while seamlessly interacting with others—whether sending Bitcoin and receiving Ethereum or paying in USD to settle a JPY invoice.

👉 Discover how next-gen payment networks are redefining value transfer.

Seamless Cross-Currency Payments

Imagine sending Bitcoin and having the recipient receive Ethereum—automatically, instantly, and without either party managing exchange logistics. That’s Interledger in action.

Behind the scenes, ILP works much like the internet routes data packets between ISPs. When you initiate a payment in BTC, your wallet sends Interledger packets denominated in BTC to a connector. That connector applies real-time exchange rates and forwards equivalent value in ETH to the recipient—all within a single atomic flow.

For less common asset pairs, packets may traverse multiple connectors, each incentivized to find optimal routing paths. Most importantly, this entire process is trustless: senders never risk loss or theft during transit, thanks to cryptographic guarantees built into the protocol.

Core Features of the Interledger Protocol

Simplicity lies at the heart of ILP’s design. Inspired by the Internet Protocol (IP), Interledger prioritizes minimalism to maximize compatibility across systems. An open network of networks proves stronger, more scalable, and richer in functionality than any isolated system.

Three foundational features define ILP:

Simple Packet Format

The foundation of Interledger is the ILP packet, a lightweight messaging standard used between senders, connectors, and receivers. Modeled after IP packets, ILP packets ensure universal routing regardless of underlying ledger technology.

ILPv4 defines three packet types:

A Prepare packet contains just five fields: destination address, amount, end-to-end data, condition (a cryptographic hash), and expiration timestamp. This lean structure enables fast processing and broad interoperability. Using the universal ILP addressing scheme, connectors efficiently route payments across heterogeneous networks.

Trustless Sending

One of ILP’s most powerful innovations is trustless value transfer. Users can route payments through third-party connectors without trusting them—a critical feature for decentralization and security.

This is achieved through a “forward-and-backward” packet flow, akin to a two-phase commit:

  1. Forward Phase: Prepare packets travel from sender to receiver, representing a conditional promise to pay.
  2. Backward Phase: Only after the receiver is paid does the connector generate a fulfillment, containing cryptographic proof (a preimage of a hash). This Fulfill packet travels back through the chain.
  3. Settlement: The sender releases funds only upon receiving valid proof.

If any step fails—due to timeout, misrouting, or rejection—the transaction aborts safely. No money leaves the sender’s account. Higher-level protocols automatically retry failed transfers, ensuring reliability without compromising security.

Packetizing Value

Perhaps the most transformative upgrade from ILPv1 to ILPv4 is packetized payments—breaking large transfers into many small-value packets. Much like data packets on the internet, this approach enhances efficiency, security, and scalability.

Here’s why it matters:

Real-World Applications and Ecosystem Growth

Today’s Interledger network excels in two key areas: cross-chain cryptocurrency trading and micropayment monetization. A growing ecosystem of projects leverages ILP to build inclusive, efficient financial tools.

Notable implementations include:

Many more projects remain in stealth mode—indicating strong momentum in the space.

👉 See how developers are building the future of cross-chain finance today.

Getting Started with Interledger

Building on Interledger is accessible and well-supported:

While originally supported by Xpring (Ripple’s developer ecosystem initiative), Interledger remains fully open-source and community-driven—hosted under the W3C Interledger Community Group. There is no Interledger token, company, or blockchain.

Frequently Asked Questions

Q: Is Interledger a blockchain?
A: No. Interledger is a protocol—not a blockchain or cryptocurrency. It connects existing ledgers without requiring new infrastructure.

Q: Do I need to trust connectors when using ILP?
A: No. ILP ensures trustless transfers via cryptographic proofs. Money is only released after delivery confirmation.

Q: Can ILP work with fiat currencies?
A: Yes. Connectors can link traditional banking rails (e.g., SWIFT, SEPA) with blockchains, enabling seamless crypto-fiat conversion.

Q: What are streaming micropayments?
A: Payments sent continuously in real-time—for example, paying per second of video watched. ILP makes this possible with packetized transfers.

Q: How does ILP differ from other cross-chain solutions?
A: Unlike bridges that lock assets or require wrapped tokens, ILP routes value natively across systems without custody changes.

Q: Is Interledger secure?
A: Yes. Its design prevents fund loss during transit. Timeouts and cryptographic conditions ensure safety even over untrusted paths.

Interledger represents a paradigm shift—a universal layer for value transfer as foundational as TCP/IP is for data. By unifying fragmented financial networks through simplicity, neutrality, and innovation, it paves the way for a truly open global economy.

👉 Explore tools and platforms shaping the future of decentralized finance.