The story of Blockchain started in 2008 with a cryptocurrency called Bitcoin. Invention of bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. In order to achieve this Bitcoin was using a public transaction ledger called blockchain. The cryptocurrency as well as technology behind it got the attention of the community as well as industries. It gave birth to inventions of several other cryptocurrencies and platforms based on blockchain. Since then the world has seen various blockchain platforms, cryptocurrencies and protocols projects with the vision for a decentralized future.
In the last 12 years Blockchain evolved in all directions. The technology is in its initial stage and the market is still trying to explore possibilities. In the beginning we would have thought of a few blockchain networks across the world with their own governance tokens. However momentum is shifting towards smaller blockchain networks built and customized for certain purposes. The initial concept of having few public distributed networks is transforming into having several custom blockchains across the world.
Community and enterprises have started realizing that the future is going to have several blockchain networks with their own technical and business rules.
“We would be left with a scattered collection of siloed blockchains, each supported by a weak network of nodes and susceptible to attack, manipulation, and centralization.” ConsenSys research paper”
This change in the market is knocking with its own huge challenge. The challenge of having a communication layer to interact with these scattered blockchains. Interchain communication will be crucial for asset transfer as well as blockchain based app solutions perspective
What is interoperability?
The term blockchain interoperability means ability to communicate and exchange data between different blockchain networks without any centralized intermediary. Things go interesting when these different networks consist of different architectures and protocols. Interoperability layer will abstract underlying chains and providers common communication interface for DApps to work with different chains.
Business expectations will always remain the same irrespective of tech solution and this applies to blockchain too. For smooth business operations between different entities underlying technology should be flexible enough to cross barriers of differences in chains and communicate at some common level. This should be possible by keeping decentralized blockchain architecture intact without introducing any centralized entity. Interoperability enables to move assets between chains irrespective of underlying chain type. Business processes can be automated with the platforms which can work with several types of blockchains to solve certain use cases.
The existing interoperability solutions in the market can be roughly classified into two types
These platforms are developed to provide interoperability to existing chains. Loom network which provides an interoperable base chain connected to other major blockchains such as Ethereum, Binance Chain, and Tron. Panama Gateway project by Binance enables cross-chain circulation of different network assets.
Platforms build from ground up
There are next generation platforms providing interoperability as well modern underlying chains which are faster, scalable and reliable. Cosmos network is for building your own custom blockchain in a modular way. The project aims towards creating an ecosystem of interoperable blockchains which can be scalable. Polkadot is another project aimed towards blockchain interoperability as well as providing better security and scalability. There are several other projects has interoperability as core feature such as Wanchain, Dragonchain
With a wide range of projects aiming towards interoperability it will be interesting to see how blockchain evolves further to provide scalable and interoperable ecosystem for solving complex use cases.