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It’s no secret that Blockchain technology has the potential to revolutionize the world the same way the internet did- maybe even better. Already, it’s proving its capabilities in areas like finance, identity management, governance, asset management and many more.
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Blockchain network features such as; transparency, immutability, security, cost-effectiveness, and trustlessness will forever change the way institutions and individuals operate.
Nonetheless, most real-world businesses have been slow to adopt this technology because of two major challenges currently associated with it.
Challenges Blockchain Faces
1. Scalability
Leading Blockchain networks such as Ethereum and Bitcoin have trouble supporting massive transactions on their network. Network congestion here often results to slow transactions and an increase in transactions fees.
Therefore any emerging Blockchain network hoping to host users at a global capacity and meet the practical needs of businesses has to increase its blocktimes tremendously.
2. Connectivity
Secondly, in a conventional crypto world, each Blockchain has to create a complete ecosystem with its users, native currency and DApps. This has resulted in Blockchains operating in silos, which makes it difficult for the networks to communicate with each other. And without connectivity, direct transfer of assets between Blockchains is indeed an uphill task.
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As you can rightly guess, this lack of interoperability is a big hindrance to the mass adoption of Blockchain technology.
But all is not lost. Thanks to the emerging cross chain solutions such as POA, Fusion and Wanchain which will go a long way in solving Blockchain compatibility frustrations.
So what is Cross Blockchain Compatibility?
Just as the concept suggests, Cross Blockchain compatibility enables Blockchain networks to directly communicate with each other, therefore allowing for the transfer of value. Compatibility, in this case, means Blockchains that could be sharing the same network like Ethereum can transfer value.
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This implies that, as a business, you are no longer limited to the number of clients available in the network your business was built on. Cross Blockchain compatibility, allows you to transact with other clients from other compatible Blockchains directly and efficiently without any downtime or expensive transaction fees.
Practically speaking, a project can now move intensive computations to a chain with faster performance and significantly slash the operating expenses. Cross chain bridges allow projects the freedom to choose and give room for fair competition.
Cross blockchain compatibility brings many benefits to the crypto sphere. Let’s dive in and explore a few:
Advantages of Cross Blockchain Compatibility
Blockchain Interoperability
Cross blockchain compatibility will allow for the different blockchains to freely and directly interact without the need of third parties exchanges.
Multi-Token Transactions
With cross blockchain compatibility the multi-token wallet system will be accessible.
This will negate the need of crypto users and investors relinquishing total control of their assets to third parties exchanges (where they kept their tokens). While also taking the responsibility of bearing any third-party risks that the exchange might encounter.
Value Transfer system
Just like the Internet of Value, with cross blockchain compatibility, Blockchain networks will have an effective means of value transmission.
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Now that you know the advantages of cross Blockchain compatibility let’s have a look at a few examples of Blockchain compatibility solutions.
Cross Blockchain Compatibility Solutions
1. POA
POA is one of the networks that has taken a step in making cross blockchain compatibility a reality. The company has started small by creating a cross chain bridge that can connect to any network that is compactable with Ethereum. Such networks include Ubiq, Ethereum Classic, Rootstock, the POA network, Expanse and many others.
To create this bridge, POA modified the components of the simple parity bridge available in open source and developed the ready to use solution. Their cross chain project is an open source project that can be used by any player in the industry with or without modifications.
2. Fusions finance Focused Cross-chain platform
Fusion is a relatively new platform, which aims at developing a fully functioning platform for financial services. The project hopes to provide cross chain and cross-organization solutions.
The Fusion project will achieve these goals by allowing APIs to aggregate several data sources, off-chain values and a variety of blockchain tokens into a single blockchain. This will make it possible to map an array of tokens and assets onto the blockchain hence enabling the creation of multi-coin smart contracts. Users from different blockchains will be able to interact with each other on a trustless basis.
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Fusion uses a proprietary piece of technology known as Distributed Control Rights Management (DCRM), which distributes the control of private keys throughout the public blockchain. This makes it impossible for anyone node to access the complete private key. This means that the security of the platform is guaranteed as no node can take full control of the network’s digital assets.
3. WanChain, the network Geared Towards banking
WanChain is specifically tailored to serve the banking and financial world. Its primary aim is to build a decentralized financial market. The distributed infrastructure of the platform makes it possible for its users to exchange assets across different blockchains. The platforms native coin, Wancoin, serves as the intermediary for these exchanges
What is more, Wanchain is a distributed ledger that keeps records of each intra-chain and cross-chain transaction. These financial records cannot be altered. The immutability of these records is very useful for institutions such as banks and clearing corporations
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Wanchain uses a distributed security protocol that prevents any single party from taking control of the operation of the system. The platform also allows for multi-coin smart contacts. However, Wanchain does not provide off-chain data support and focuses solely on crypto markets.
4. Polkadot, enabling inter-blockchain communication
Finally, there is Polkadot, which unlike Wanchain and fusion, which focus on cross chain technology specifically aimed at the banking and finance industry, focuses on allowing scalability of decentralized computation. Polkadot’s major goals are more general in nature with a focus on interoperability and communication on the blockchain.
To achieve its objective of allowing communication between different Blockchains, Polkadot has introduced a new concept known as parallelizable chains often shortened to ‘parachains.’ These parachains are simplified forms of Blockchains that make use of the security provided by the relay chains rather than providing their own security protocols.
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The relay chain provides for security of the communication between parachains. This allows the parachains to conduct independent computations efficiently without being restricted to a Blockchain specific language or virtual machine.
Final Word
Cross Blockchain technology is evidently the key needed to hasten the pace of Blockchain adaptability in the world. Its ability to increase accessibility, link up disconnected systems and enable quick transfer of value is a crucial factor that will drive mass adoption of Blockchain products.
As a highlighted in this article, new entrants such as POA, Fusion and Wanchain have already developed solutions that will come in handy in broadening the scope of services and simultaneously ensure trust as well as security necessary for enterprise-level solutions to modernize outdated approaches.
All said and done; we should anticipate that crypto sphere will continue to mirror user demands to achieve scalability and robust interoperability.
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