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Is Cross-Chain the Future?

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Is Cross-Chain the Future?

By: Everychain

Blockchain technology is on a steady rise with new players innovating and introducing new projects in the market. However, each blockchain project is unique, with its own rules of validation running on different networks having their own regulatory rules. Now what we havet are a lot of unconnected blockchains running in parallel but isolated from one another. To understand this further every blockchain can be thought of as a separate country with its language and rules. Now for you to travel with your belongings from one country to another, you need airlines or trains which carry you and your belongings at a minimal fee. In other words, you need a bridge connecting you to different countries. Similarly, to move from one blockchain to another you need a corresponding bridge, meaning there is a need for interoperability between different blockchains. This bridge issue is handled by cross-chain technology, which aims to introduce communication between different blockchains.

A question that arises now is why would we need to travel between different countries, why is there a need for blockchains to interact with one another, or why is interoperability so important? This can be answered by understanding the definition of blockchain – which is a decentralized, distributed ledger technology. If all blockchains function independently without any interaction, then the blockchain ecosystem is not completely decentralized. In other words, without cross-chain technology, if a user X wants to sell NFTs to user Y`, user Y would have to be using the same blockchain as user X. Clearly, this limits users from realizing the full potential of blockchain technology and hence a fully decentralized system is the need of the hour. This is where cross-chain technology comes into the picture and engenders a new world of digital currency – Decentralised Finance (DeFi). With DeFi, tokens can be sent across different blockchain networks. This encourages multi-token wallets where a single wallet can support transactions over different cryptocurrencies. Cross-chain technology also has great implications in the health care industry. Sharing and accessing patient data is of utmost importance and a problem that is not only a critical one but has been tried to tackle by both public and private institutions. Again, this is a problem of interoperability that could be smoothly solved with cross-chain technology. Critical health care information could be shared securely across various institutions using blockchains, ensuring efficiency,transparency, and security.

The future potential of blockchain cannot be realized to its full capacity without adopting cross-chain technology allowing interoperability. Blockchain technology has the potential to disrupt the supply chain industry — be it food, luxury goods, aviation, etc. Even so, many organizations remain hesitant to introduce blockchain technology into their operations and businesses due to having to depend on one vendor and the inability to switch vendors in the future if needed, as data can’t be transferred without interoperability. To facilitate the mass adoption of blockchain in various businesses and to ensure scalability, cross-chain is key.

Even though achieving interoperability is an ongoing challenge, developments in cross-chain technology are imminent with numerous players getting a grip on the problem. One of the most anticipated emerging stars is Polkadot, which is emerging to be the biggest platforms in the domain. Polkadot allows the transfer of smart contract data through various blockchains. It adopts a relay chain or “main chain” which connects various application-specific blockchains called “parachains”. It also uses a proof-of-stake rather than a proof-of-work consensus mechanism to ensure a low carbon footprint. Cosmos is another noteworthy project similar to Polkadot in concept. It uses a hub-and-spoke system where numerous “spoke” chains are connected to a central “hub”. Wanchain,unlike Cosmos and Polkadot, does not rely on relay chains or central hubs, and can connect heterogenous blockchains like Bitcoin, Ethereum, and EOSIO. Recently, Wanchain 5.0 introduced two-way bridges, meaning assets can be transferred both to and fro between Wanchain and external blockchains like Ethereum and Bitcoin. The company is now working to build direct bridges that allow transferring assets between Ethereum and Bitcoin without needing to reroute assets through Wanchain. Other projects working on interoperability that are worth mentioning include Avalanche, Aion, and Blocknet.

Cross-chain is emerging to be the leading technology in determining the future of blockchain by allowing seamless communication between blockchains and is being seen as the ultimate solution for interoperability. As more developments are carried out in the coming years, the acceleration toward the goal of a connected blockchain ecosystems is seemingly positive. The prime reason why cross-chain technology is here to stay is that it tackles the existing problems of scalability and transparency in the blockchain ecosystem. Cross-chain technology will not only widen the scope of cryptocurrency but also promote the mass adoption of blockchain. Hence, cross-chain technology is very much on the road to revolutionizing the blockchain industry.

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