Earlier, cryptocurrency and blockchain technology used to be under the nerds and geeks turf, but now, times have changed. Experts predict that the blockchain industry’s size will expand to over $69 billion in about six years. Currently, the market capitalization rate of the entire cryptocurrency market is over $2 trillion.
Various businesses, individuals, institutional investors, and governments are gaining optimism on the constantly evolving blockchain technology. There are several challenges blockchain faces on its way to mainstream.
One of the significant challenges faced by blockchain is the lack of interoperability – cross chain compatibility.
Know the Basics of Blockchain Interoperability
Many things are so common that our brains often choose to ignore them. Such is the case with interoperability. To start with, let us take examples of some things that we’re familiar with: mobile phones, computers, and email.
Emailing wouldn’t be half as efficient and impactful as it is today if only two email platforms built on two different infrastructures were not interoperable. For example, what if you couldn’t send an email from an account on Gmail to an account on Outlook? Surely, emails wouldn’t have made it this far into the future.
Need for Blockchain Interoperability
The first blockchain was created by Satoshi Nakamoto in a bid to offer freedom to people who constantly relied on intermediaries to process their financial transactions. Since its inception, finance has been one of the most significant targets for blockchain projects.
Ethereum followed suit, showing the world that blockchain utlizes a range way beyond financial transactions.
Six years since Ethereum’s launch, we have blockchains disrupting several industries, starting from supply chains to video games, real estate to healthcare, and agriculture to entertainment.
The Rapid Expansion of Blockchain
As blockshains continues to expand rapidly across industries, numerous blockchains have come up, strictly focussing on beating each other. Blockchain’s features include greater scalability, faster block times, higher security, and more.
The Main Point of Interoperability
Despite offering various features, blockchain projects fail to uphold one critical point – without interoperability, the adoption of blockchain will be highly segregated and restricted.
The best example is to think of the two biggest blockchain networks – Bitcoin and Ethereum. The first supports the most widely used cryptocurrency, BTC. The second supports the most number of decentralized applications (dApps) and a majority of the decentralized finance (DeFi) ecosystem worth billions of dollars, according to readwrite.com.