Can the interoperability of blockchains change the world?

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Blockchain-based networks boast of capabilities to operate in a trustless environment. But can interoperability of blockchain lead to an increase in its adoption? Read this blog to find out.

Blockchain-based networks are emerging strong and providing unmatched value by offering trust as a protocol and the capability to operate safely in trustless environments. However, these networks need to ensure their own safety and prevent attacks. To these ends, different networks have been using different parameters based on their objectives. If we look at the consensus level, these trade-offs involve limiting the number of participant nodes or adopting a probabilistic view of ordering events. But if we look at the application level, these trade-offs involve limiting the design size of an application for interface with blockchain network and offline data storage. There are many other parameters, but we will not explore them here.

Importantly, these blockchain-based networks have chosen different trade-offs based on which of them provides the best protection for the key capabilities offered by the network. A blockchain-based network offering global payment capabilities would need a different level of protection against a blockchain-based network designed for storing digital assets. The differences between these networks would exist at many levels, including security, privacy, scalability, and throughput.

The blockchain-based networks are being built to offer specific capabilities such as making payments, storing and trading assets and others. However, these capabilities are being offered in isolation where these networks don’t talk to each other and cannot share data. Existing centralized systems have evolved to offer the same capabilities in a more integrated way where these systems are able to run end to end transactions seamlessly making it easier for users.

If blockchain-based networks have to make a strong case for their adoption, they have to be able to work with each other and offer this seamless integration of capabilities to their users.

Strong interoperability would give users a much more useful, user-friendly experience. With this interoperability, users will be able to experience the seamless integration of capabilities being offered by the blockchain-based networks. If we have to hypothesize an example, it would look something like this – User will be able to tokenize the asset (e.g. artwork) over Ethereum based DApp,  will be able to transfer the tokenized asset to another address over Cardano, and pay any corresponding transaction fees over the bitcoin network.

Although, such interoperability makes a strong business case on its own, it has thus far made limited progress due to lack of standards for blockchain-based networks. Many blockchains, including Bitcoin, Ethereum, Stellar, and Cardano continue to grow in different directions. However, I don’t think this trend will disappear even if we do have standardization. Thus, we have to approach this interoperability largely externally. An example can be blockchain-to-blockchain API interface that allows a smart contract on one network to verify the consensus finality of events on another network.

There have already been some advances with projects such as Liquid, BTCRelay, Lightning Network that focus on offering interoperability between blockchains. However, these are very specific initiatives, currently focusing on specific blockchain networks only.

We will see more of these projects in the near future considering the emergence of blockchain-based networks offering specific capabilities. These networks are already realizing the need of integration among them to boost the adoption. Technical capabilities to accomplish this interoperability is already shaping up in the form of Lightning Networks, Atomic Swap and others. It’s just a matter of time now before interoperability evolves for blockchain-based networks. However, this will be a significant game changer which will have strong influence on how we live! We just need to be open to acknowledge and accept the better and new ways of living it with decentralization growing around us!

 

 

 

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