Wisdom Oparaocha On Hidden Issues solved by Cross-Chain Platforms like Polkadot
The widespread use of blockchain platforms has brought problems with processing speed and scalability in older blockchains. Furthermore, because all blockchains function separately and do not connect, developers have a unique problem, and as a result, users do not get the full benefits of blockchain technology.
With this challenge, people on various blockchains cannot achieve complete decentralisation unless connected through a common protocol. Cross-chain technology tries to solve this problem by allowing multiple blockchains to communicate. It implies they’ll all be able to communicate and share information. This unique feature is known as “Interoperability.”
The cross-chain protocol is a technology that allows information and value to be exchanged between blockchain networks, enhancing their interconnectedness. As a result, the walled character of blockchains is broken, resulting in a linked dispersed ecosystem. A cross-chain, in particular, runs independently of the connected platforms.
Therefore it does not inherit the flaws of its interfaced networks. Inter-blockchain technology attempts to eliminate intermediaries when transferring value between decentralised networks, allowing users to connect with other blockchains effortlessly.
Polkadot, Blocknet, Cosmos, and Wanchain are some of the most popular cross-chain initiatives, focusing on a distinct facet of interoperability. Polkadot, for example, intends to improve the sharing of smart contract data between distributed platforms, whereas Blocknet focuses on a decentralised exchange (DEX) that connects blockchains.
Decentralised Finance (DeFi) is one major area that requires cross-chain technologies. Inter-blockchain connectivity allows token swaps between different networks in the DeFi world, enabling interoperability, critical for financial ecosystems to thrive.
Users can also employ cross-chain technologies to get around common trade-offs across distributed platforms and take advantage of the benefits of diverse consensus processes to obtain the best of both worlds.
Ripple is a good example of a blockchain project attempting to investigate cross-chain transactions. Ripple is working to make it possible for people and entities to exchange various digital assets across different blockchains, even though it is still in its early stages of development.
For starters, Ripple has already begun assisting banks worldwide in settling cross-border payments in various currencies and cryptocurrencies. Here, we discuss the several benefits that cross-chain technology offers the cryptocurrency industry and several other industries at large.
Benefits of Cross-Chain technology to the Cryptocurrency Industry
1. Blockchain Interoperability: The capacity to transfer information across several blockchain networks is known as Blockchain interoperability. Thanks to interoperability, people may easily see and access information across various blockchain networks. For example, if someone sends data to another blockchain, shouldn’t the recipient be able to read, comprehend, and react to it with minimal effort?
However, this is impossible because information cannot be shared across the Bitcoin and Ethereum blockchains presently. But with the aid of cross-chain technology, information from an Ethereum blockchain may be sent to a Smart Chain Network.
Blockchain Interoperability will go a long way toward eliminating intermediaries or third parties associated with centralised systems. Furthermore, the capacity of multiple decentralised networks to connect without intermediaries should help create truly decentralised systems.
2. Data Ownership: In the health sector, the healthcare system’s inability to exchange and act on data is a well-publicised problem that has hampered service delivery for years. Interoperability is a major issue in the healthcare industry, with research showing that 86% of providers cannot easily communicate crucial health information, thus making ownership of data a huge challenge.
On the other hand, healthcare players may soon be able to keep ownership of their data thanks to blockchain interoperability. In addition, the digital ledger system has one of the greatest degrees of security, which reduces the risk of unintentional data exchange and improper revisions.
3. Enhanced Security: Only 35 to 40% of healthcare data is encrypted at the moment. However, all data might be secured by default using blockchain interoperability technologies. This Blockchain technology should alleviate the industry’s long-standing data security issue. In addition, because there are no intermediaries, the risk of sensitive information falling into the wrong hands should be reduced.
As new initiatives in the blockchain industry are gradually adopting the concept of cross-chain technology, they are trying to establish platforms that can interact with one another without using a third party to solve the connectivity problem in the industry and across several industries.
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