INTEROPERABILITY — The Key To Mass Adoption
Blockchain technology offers an unparalleled level of decentralization and transparency, with a tradeoff in performance and inter-connectivity. In a foreseeable future, we believe that blockchain solutions, especially smart contracts, will help people reach a trustless agreements with ease in every single aspect of our everyday lives. However, current approaches to achieve this are either built to make other blockchains obsolete or require a significant change from the participating chains.
There have been many blockchain infrastructure projects that promise to solve various if not all problems. In our opinion, each blockchain has different features and sometimes they specialize in solving specific problems. We believe that when blockchain mass adoption takes place, there won’t be a single chain that “rules them all”. This idea of a single omnipotent blockchain goes against the very fundamental idea of blockchain technology — “decentralization”. Our vision of the future blockchain space is one with many chains co-existing, side by side, servicing different geographical areas and specific needs. Hence there is a need for a blockchain ecosystem that interconnects the many blockchains, operating in isolation, together into an interoperable harmony. Hence the need for Blockchain interoperability: the ability of blockchain networks to interact and integrate with each other.
Interoperability is the ability to freely share information across blockchain systems. In a fully interoperable environment, if a user from another blockchain sends you any type of information to your blockchain, you would be able to easily read, comprehend, and interact with or respond to that information with little effort.
Exchange of Assets — Decentralised Exchanges (DEX)
The need for a cross-chain decentralized exchange is paramount, considering that for a project to be listed on a good centralized exchange these days is costly and time-consuming. Furthermore, many ICOs are now being conducted on blockchains other than ETH, for example on NEO, whilst their corresponding DEXes only allow swapping of ERC-20 and NEP-5 respectively. It shows that the ability to cross swaps between ERC-20 and NEP-5 exchanges is still much needed. There are a number of projects that are working actively to solve this problem, however, there are a number of problems in their solutions that we will discuss further in the next article.
Exchange of Data
The notion of interoperability in blockchain extends to cross-chain data reading and replication. While smart contracts are an efficient way to trustlessly execute agreements between any parties, it requires said parties to have accounts on the same blockchain. A cross-chain data flow would allow a wider user base to interact with each other through interconnected smart contracts and Dapps. From the developers’ perspective, they can leverage the available resources on different blockchains and incorporate functions of various Dapps to make better products with lesser effort. As far as our research goes, there is currently no solution that offers this level of interoperability in a truly decentralized manner.
Projects that want to implement interoperability in their system aim to create a platform that will enable various different blockchains to communicate easily with each other, without the need for an outside intermediary. Each of the individual blockchains will have a different design to serve specific purposes and should be embraced for their own uniqueness. Hence, there should be a smart ecosystem capable of utilizing the collective strength of all existing blockchains and overcoming challenges in discoverability and isolation. Lack of interoperability stagnates the progress of the applicability of blockchain and therefore, mass adoption. There is no internet of value without interoperability.
No matter the intended application, cross-chain interoperability is the key to mass adoption and those that can execute it well will become the leaders in blockchain. For that reason, there have been several approaches, like hashed timelock contracts, oracles, or cross-chain protocols to tackle this issue. In the next article, we will discuss these solutions in depth to see if any holds the key to mass adoption.
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