The Importance of Blockchain Interoperability
Ask someone familiar with blockchain for solutions regarding making blockchain better; you would get suggestions ranging from improving UX design to increasing accessibility for non-technical users. But what about communication between different blockchain networks? This article introduces blockchain interoperability and explains its impact on how users interact with blockchain networks.
Key Points
- What is Blockchain Interoperability
- Benefits of Blockchain Interoperability
- Blockchain Interoperability Approaches
What is Blockchain Interoperability?
A blockchain is a distributed database shared between nodes of a computer network. Blockchains attempt to guarantee the security of data. It operates on a “trustless system” that eliminates the need for third parties such as banks and other centralized financial (CeFi) institutions. Interoperability enables blockchain networks to share and access their data and work with each other.
Blockchain interoperability is the communication between two or more blockchain networks. This communication includes exchanging and leveraging data to move assets between networks.
Many internet users reap the benefits of interoperability. Thanks to TCP/IP protocols, users can browse web pages regardless of their internet browser or the machine they are browsing on. Users would need to send information through specific proxies and destination networks without interoperability, which increases the complexity of internet use, something we want to avoid.
Benefits of Blockchain Interoperability
On already established blockchain networks like Ethereum and Solana, there are several dApps, smart contracts, and services that users can utilize. However, there isn’t much opportunity for these resources to connect with each other across networks. The use of blockchain interoperability could promote an even more decentralized blockchain ecosystem by allowing different organizations and industries to interact with one another. Markets and applications that were previously considered entirely separate will be able to seamlessly transfer data and value between networks, enhance collaboration across networks, and promote customizable web3 services.
Decentralization is already a massive component of blockchain technologies and web3. Still, the next step would be expanding that decentralization so that network-specific dApps can communicate with one another through a decentralized hub.
Developers and users have their tools limited by what is available on their current network of choice. The integration of blockchain interoperability could allow stakeholders to utilize resources from various blockchains. This enables blockchain technologies to advance industries such as real estate, law, and healthcare through smart contracts and dApps that have access to various tools hosted on multiple networks. Blockchain interoperability could also promote multi-wallet systems and multi-token transactions that could streamline the web3 experience for users.
Blockchain Interoperability Approaches
Blockchain networks are developed in isolated environments. As a result, many dApps and smart contracts created cannot support interoperability. With smart contracts being immutable, there will be a need to develop new resources that will help us achieve the state of interconnectedness.
Blockchain Bridges
As technical writers bridge the gap between technical concepts and the average user, bridges serve a similar purpose. Bridges promote communication between blockchains through transferring assets. They allow an asset maintained by one network to be utilized by an asset on another network.
Blockchain Oracles
Oracles connect blockchain networks with external systems allowing smart contracts to execute using real-world inputs. It connects blockchains with off-chain data.
Chainlink
Chainlink provides utilizations that support smart contracts on any blockchain network. It expands the capabilities of smart contracts by giving them access to real-world data and off-chain computations.
Sidechains
Not to be confused with blockchain forks that change a network’s protocols or rules, sidechains are separate blockchain networks compatible with a single “main” blockchain network. Each sidechain has specific use cases to improve the overall ecosystem’s processing efficiency. Developers other blockchain users use sidechains to test features that aren’t available on the main network.
Conclusion
Solving issues revolving around interoperability should become prioritized. To believe in blockchain decentralization and the technologies it supports is only the first step. There must be a deep analysis of blockchain’s weaknesses so that the technology can advance and everyone would be able to reap its benefits. Remember, friends, do or do not; there is no try. Happy learning!
