The evolution of blockchain technology and cryptocurrency will hinge on achieving interoperability. Moving data and value between chains and networks help unlock broader participation, versatility, and liquidity. Several projects push the boundaries of cross-chain technology, which will benefit the wider industry in the coming years.
The Importance Of Interoperability
It is not hard to see why interoperability between different blockchains would prove beneficial. Having decentralized ledgers work in tandem can address some of the current industry drawbacks, including high fees, slow processing, etc. Moreover, numerous blockchains provide unique features and benefits one might not find on other networks today. Different approaches by developers pave the way for more complex use cases, attracting a broader mainstream audience.
Building cross-chain technology is not necessarily straightforward. For example, enhancing interoperability between blockchains is a powerful concept, but most networks have consensus mechanisms, technology standards, etc. As a result, ensuring everything plays together is more complex than it may seem at first. Thankfully, the following projects aim to solve this tricky puzzle one step at a time.
Syscoin
The Syscoin blockchain expands on the concepts of Bitcoin and can be merge-mined with the world’s leading cryptocurrency. As a result, Syscoin benefits from the security of the Bitcoin network while providing extra functionality, including smart contracts. Over the years, the ecosystem has undergone multiple significant upgrades, introducing crucial improvements like a new graphical interface, fungible and non-fungible token support, and cross-chain interoperability.
That latter aspect is possible through Syscoin Bridge, supporting cross-chain asset interoperability without atomic swaps or intermediaries. Syscoin also activated Segregated Witness – like Bitcoin – to enhance its scalability and security. Moreover, the ecosystem combines the security of Bitcoin with Ethereum’s smart contracts through its NEVM (Network-Enhanced Virtual Machine), offering a robust and low-cost performance solution to build interoperable smart contracts.
Today, Syscoin is seen as a combination of Bitcoin’s safety and Ethereum 2.0’s performance characteristics while remaining cheap and fast to use.
Cosmos
Many people are strongly interested in the Cosmos ecosystem, primarily for its blockchain interoperability approach. The team aims to establish the internet of blockchains by serving as a hub for different networks to co-exist independently. The Cosmos Hub “translates” the “languages” of connected blockchains. It can also keep records of the current state of every connect chain – known as Cosmos Zones – and relay information between them.
A Cosmos Zone is an application-specific blockchain. Ever Zone can accept or refuse connections with other Zones, ensuring there is no blockchain bloat and much higher efficiency. Any blockchain can build a bridge to the Cosmos Hub, should its developers want to explore that option. The inter-blockchain communication (IBC) protocol – introduced in Cosmos’ Stargate upgrade – is a big step toward that inter-connected future.
It is worth noting IBC enables sharding for blockchains, paving the way for future efficiency enhancements.
Polkadot
The Polkadot team has always clarified that interoperability is an essential part of the roadmap. Allowing different chains to communicate with one another is a powerful concept. But unfortunately, no single blockchain design works optimally for every use case, product, or service. While that gives rise to many “specialized” ecosystems, it also established a more siloed industry. Polkadot aims to change that narrative through parachains.
There will be several dozen parachains connected to the Polkadot main chain in the first iteration. Every parachain is used for one specific application, product, or service while offloading the rest of the data to the primary blockchain. Developer teams can engage in auctions to rent parachains and build diverse applications. Ultimately, Polkadot aims to create a decentralized network of chains freely communicating.
Harmony
The Harmony team pursues blockchain interoperability by focusing on existing blockchains rather than creating new chains in a siloed environment. A cross-platform bridge would require various components to ensure efficiency, transparency, and accessibility. Harmoney provides interoperability with the BNB chain through network nodes, known as validators.
Additionally, Harmony establishes liquidity pools with existing blockchain networks to facilitate cross-border payments, asset transfers, and cash-flow management. A cross-chain feature with Ethereum and Polkadot is an essential development, as are implementations with Uniswap, Chainlink oracles, and Bitcoin.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
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