Even though blockchain technology seems pretty complex, take a few moments to imagine each chain as its own individual island.
In today’s world, a blockchain built by an organization sits alone. This digital island, like their real-world counterparts, is completely separate from other islands. Even if the island knew there were other islands around it, there is no way to communicate or have any sort of interaction with each other. Some islands might not even know they have neighbours.
The compartmentalization of blockchains is one of the biggest talking points in today’s crypto world.
Many compare today’s ecosystem to what was seen in the 1960s and 1970s, before the internet.
MIT’s Thomas Hardjono explains: At the time, there were several separate approaches to building computer networks, but real progress was made when entities figured out how to work together. In the next two decades, the construction of common infrastructure led to concepts like the internet protocol (IP) and transmission control protocol (TCP).
Many understand blockchain technology is at a watershed moment. Intercommunication between chains could drastically re-shape many components of society. Chains working together could transfer assets in the midst of a threat to keep funds secure. Medical teams using blockchain could safely and securely send information between each other to improve patient services.
There are a few approaches to cross-chain communication. One is through relays, which foster interoperability by verifying events and block headers. BTCRelay is an example of this concept but costly to operate.
Another is atomic swaps. This process lets a user trade cryptos using a Hashed TimeLock Contract (HTLC), in a process similar to ‘wrapping’ crypto.
A third, and the most popular, is merged consensus. This allows cross-chain communications to be built into a blockchain directly. Examples include Ethereum 2.0 and several other projects. Hopes are a merged consensus will help developers and crypto users leverage the collective power of combined blockchains to bring greater value to the entire ecosystem.
Many projects have become prominent for their work on promoting blockchain interoperability. Polkadot, Wanchain, and Cosmos are three examples who have made waves for their innovative efforts.
Polkadot
Polkadot was conceived by Ethereum co-founder Gavin Wood, who has worked on the project for the last few years.
Polkadot describes itself as a “next-generation blockchain protocol that unites an entire network of purpose-built blockchains, allowing them to operate seamlessly together at scale.”
Polkadot leverages heterogenous sharding to operate. This process breaks down workloads, so nodes have their own data shards. Shards are shared so interoperability is achieved while keeping each chain unique. The Polkadot infrastructure includes a main relay chain, parachains, and bridges. Parachains can mint and transfer tokens while connecting to other chains with bridges. Polkadot has received much attention and acclaim for its work, and many speculate the native DOT token could become a crypto heavyweight. Asian-digital asset fund Spartan Block even speculates DOT could be a top-three market cap contender.
Wanchain
The Wanchain team has built a platform relying on cryptographic theories to build a cross-chain protocol to record cross-chain and intra-chain transactions. Wanchain supports smart contracts and token exchange privacy protection, allowing an individual to function as their own bank teller to offer loan origination, asset exchange, credit payments, and settlement. So far, Wanchain has built the first truly decentralized Bitcoin-Ethereum direct bridge and other bridges connect Wanchain to EOSIO, Binance Smart Chain, and the XRP Ledger. Wanchain was built by Wanglu Tech, a Chinese firm founded by Factom CEO Jack Lu. The project joined the Blockchain Interoperability Alliance in 2017 and has struck partnerships with Formosa Financial and Chainlink, (who provides oracle data to Wanchain), among others. The native WAN token opens up opportunities to stake, participate in DeFi apps, and get involved with running validator nodes to earn more tokens.
Don’t miss a beat! Follow us on Telegram and Twitter.
Cosmos
Jae Kown originally came up with the idea for Cosmos in 2014 and was joined by Ethan Buchman to build out the platform, with a focus to lower barriers to entry for blockchain development and build a system for chains to communicate. The decentralized Cosmos ecosystem is bedrocked by Tendermint Core and the Inter-Blockchain Communications (IBC) protocol to foster interoperability. Users can harness Tendermint’s ‘blockchain-in-a-box’ architecture for integration within their own networks. The IBC facilitates communications between different chains so tokens, assets, and data can be shared. Launched in March 2019, Cosmos has received a lot of attention and funding from entities like Paradigm and Bain Capital. KR1, based in London, notes Cosmos stands as its best investment so far. The Cosmos ATOM token is earned through a hybrid PoS algorithm and can be traded on a number of well-known crypto exchanges.
Polkadot, Wanchain, and Cosmos are three industrious projects charging ahead to bring blockchain interoperability to the forefront. Cross-chain communication remains one of the most important future steps for the blockchain world’s expansion and growth to become a core component of the Internet of Money.