Users also want to move their assets freely between blockchains. Interoperability among blockchains has become a pre-eminent feature in this scenario.
Let’s get into the functioning of a few blockchains to understand the picture. Ethereum is designed to facilitate decentralized finance (DeFi). BSC allows developers to implement almost all the use cases they would want to execute on Ethereum. VeChain works to strengthen supply chain management on the blockchain. IOTA enhances payments on the Internet of Things.
Inter-blockchain communication sans intermediaries
Basically, all blockchains and DAGs (Directed Acyclic Graphs) are designed to perform different transactions and execute varied amounts of data processing. Cross-chain technology, however, has emerged as a solution to facilitate interoperability between blockchains. This feature facilitates inter-blockchain communication without the help of intermediaries, synonymous with centralized systems.
Interoperability allows nodes in a blockchain to access information across other blockchain networks. It becomes easier to send information from one blockchain to another, for example, Ethereum to BSC. The technology enables multi-token transactions between different networks.
Use cases of blockchain interoperability include projects seeking to
- perform a transfer of smart contract data from one blockchain network to another
- create a decentralized exchange having the ability to interchange communication
- launch as a standard communication protocol for various blockchains
- leverage cross-chain capabilities to boost the connection between various types of blockchains such as private, public, and consortium
- enhance interoperability via a protocol
Imperative for mass adoption of blockchain
Cross-chain compatibility is a key requirement for promoting blockchain mass adoption and use cases. Blockchain-based enterprises will not feel restricted with clients on a particular network. Rather, they’ll be able to work with clients from other compatible blockchains as well.
Prominent blockchain networks focusing on interoperability today include PolkaDot, Cosmos, Wanchain, Aion, and Blocknet.