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Blockchain Interoperability : Why Is Cross Chain Technology Important?

Blockchain and distributed ledger networks are exploding by the day. Interconnecting these new chains is becoming a necessity as more people continue to take note of the emerging technology and its capabilities. Let’s dive in deeper to see what is blockchain interoperability and why does it matter so much.

The number of blockchain projects is on the rise in part because developers are thinking outside the box as they try to leverage the technology’s capabilities. The increase also comes on acknowledgment that no perfect solution will be able to address all blockchain needs at once.

A perfect example is the IOTA blockchain that seeks to enhance payments on the Internet of Things. VeChain, on the other hand, shares similar capabilities but with the aim of strengthening supply chain management on the blockchain. Stellar blockchain, on the other hand, seeks to make it easy for people to come up with a global payment network for solving low latency issues in remote areas.

Amidst the proliferation of blockchain projects, one thing stands out. All blockchains as well as ledgers and DAGs perform a different set of transactions and handle different amounts of data processing. It is also becoming increasingly clear that there are different networks and blockchains designed for specific labor unions, religions, community organizations as well as government departments.

The rapid development of blockchain is set to give rise to many different kinds of chains. One such technology that is becoming increasingly evident is Cross Chain Technology.


Blockchain Interoperability: What is Cross Chain Technology?

Cross Chain, technology is increasingly becoming a hot topic of discussion seen as the ultimate solution for enhancing interoperability between blockchains. In Layman terms, a Cross-chain Technology is an emerging technology that seeks to allow transmission of value and information between different blockchain networks.

Increased usage of established networks like Ripple, Bitcoin, and Ethereum while a good thing has given rise to many issues key among them being economical and technical scaling limitations. As discussed above most blockchain networks operate on isolated ecosystems as they address they try to resolve a unique set of needs.

The fact that the chains operate in isolation has mostly made it impossible for people to enjoy the full benefits the ledger technology. The inability of different blockchains to communicate with one another has made it impossible for people to enjoy the full benefits of blockchain technology. Cross chain, technology seeks to solve all these issues, by enabling interoperability between blockchains thus making it easy for them to communicate with one another and share information.



Cross Blockchain Compatibility

Cross-chain, protocol ensures interoperability between blockchains, thus enabling the exchange of value as well as information between various networks. Complimented with the benefits of public decentralized chains, such protocols should lay the foundation for blockchain mass adoption and use

Cross blockchain compatibility, allows different blockchains to communicate with one another without the help of intermediaries. What this means is that blockchains sharing similar networks will be able to transfer value between each other.

While in use in a business ecosystem, businesses will no longer have to contend only with clients on a network the business as built on. Instead, companies will be able to transact with clients from other compatible blockchains. The entire process will take place without any downtime or expensive transaction fees. Just as is the case with the Internet of value, cross blockchain compatibility will accord blockchain networks an effective means of value transmission.

Want to know which enterprise are implementing blockchain? Check out our list of top 20+ enterprises implementing blockchain technology now!

Who Is Leveraging Cross-Chain Technology?
Ripple is an excellent example of a blockchain project trying to explore cross chain transactions. While it is still in the early days of development, Ripple is trying to make it possible for people and entities to exchange various digital assets across different blockchains.

For starters, Ripple has already started helping banks, around the world, settle cross-border payments with one another across different currencies and cryptocurrencies. However, the blockchain project faces an uphill task to polish its cross-chain technology.

Importance of Blockchain Interoperability

The success of blockchain technology will come down to how different blockchain networks can interact and integrate. For that reason, interoperability between blockchains is the concept by which different blockchains communicate with one another all in the effort of enabling smooth sharing of information.

Interoperability is essentially the ability to see and access information across various blockchain systems. For example, should a person send data to another blockchain, the recipient should be able to read it, comprehend and react with little effort? However, that is not possible, at the moment, as it is impossible to share information between says Bitcoin and Ethereum blockchains.

Cross Chain, technology seeks to solve all this by enhancing interoperability between blockchains. Emerging projects are slowly buying the idea as they attempt to come up with platforms that can communicate with one another without the need of a third party.

Blockchain interoperability should go a long way in getting rid of intermediaries or third parties, synonymous with centralized systems. The ability of different decentralized networks to communicate with one another without any intermediaries should thus go a long way in giving rise to fully decentralized systems.

https://101blockchains.com/blockchain-interoperability/