Blockchain Interoperability, A Secret Behind Successful Projects In 2020
The term ‘blockchain interoperability’ has been rolled around for some time now. However, the massive majority of projects are still running in siloes, thereby restricting the industry from attaining its full potential.
Lately, new organizations have sprung up that purpose to facilitate interaction between networks and assure the concept of decentralization is fully realized.
Blockchain interoperability implies the ability to share, see, and access information over different networks without the requirement of agents.
Currently, blockchain networks work independently from one another. The Bitcoin blockchain, for example, works entirely independently from the Ethereum network.
There are vast numbers of projects, all of which have distinct characteristics like the hashing algorithm, type of transactions, or consensus model – and which concentrate in a particular area. Some networks are designed for specific organizations, groups, or governmental departments.
None of these networks know the information contained in other systems, notwithstanding operating in the same industry.
ConsenSys has claimed that the ecosystem is currently in threat of ‘Balkanisation’ – displaying a series of unconnected systems working alongside, but siloed from each other.
Its research paper warned: “We would be left with a scattered collection of siloed blockchains, each supported by a weak network of nodes and susceptible to attack, manipulation, and centralization.”
Significance Of Blockchain Interoperability
The efficacy of different blockchain networks to associate with each other and share data is regarded as critical to the progress of projects and the industry in general.
Interoperability is essential in any software system – it directly won’t work to its full potential if it can’t operate with other software. For instance, most mobile apps that support payments have to interoperate with ‘PayPal.’
As IBM fellow and vice president for blockchain technologies, Jerry Cuomo recently pointed out: “Interoperability in digital systems is important – period. Blockchain happens to be the latest and greatest recent breakthrough in that, so it applies equally as well.”
Interoperability is considered to be an essential messenger to blockchain’s mass adoption because it would probably facilitate smooth information sharing, the opportunity to develop partnerships, a more user-friendly experience, more effortless execution of smart contracts, and the sharing of solutions.
At the same time, eliminating the need for agents or third parties would drive the industry closer to its purpose of decentralization.
“The concept of decentralization and blockchain interoperability are closely related,” stated Jack Lu, founder, and CEO of Wanchain.
“Interoperability is the ability to share information across all blockchain networks freely. In a fully interoperable ecosystem, if a user from another blockchain sends you something on your blockchain, you will be able to recognize and interact with it easily.”
“Blockchain projects that want to implement interoperability into their platform want to create an ecosystem that will enable different blockchains to easily communicate with each other without the need for an intermediary – like a centralized exchange.”
Projects concentrating on blockchain interoperability
Numerous projects have launched that intention to promote and aid blockchain interoperability.
One of the most popular is Cosmos, which intends to act as an ecosystem of blockchains that can compare and interoperate with each other.
The end purpose is to build an ‘internet of blockchains’ – a system of blockchains that can interact with one another in a decentralized way.
The company’s website states: “With Cosmos, blockchains can maintain sovereignty, process transactions quickly, and communicate with other blockchains in the ecosystem, making it optimal for a variety of use cases.”
Other projects comprise Polkadot, which aids transactions and data exchange; Aion, which is running towards integrating AI in its consensus model; and Ark, which allows users to create new blockchains within minutes.
Interoperability could be a game-changer for the blockchain industry, but there are still lots of barriers to surmount.
Many blockchains proceed to move in different directions, are out to fight with one another, and don’t have features that would establish interconnection.
But as interoperability start-up ventures obtain traction, it could help to convince networks that the seamless exchange of data is important to the success of the entire market.