The main question that concerns me at the moment in cryptocurrency is what it will be like in the future, can we already predict, looking at only emerging technical developments, in what form it will appear before us in the coming years. There are two directions in which you can think – this is the financial aspect and the technical, financial aspect is not interesting to me, it has little predictability from the fact that all this may collapse in the coming years to a complete transition to cryptocurrency bypassing the established fiat system.
So I would like to talk about the technical aspect. My interest is caused by the fact that many projects began to appear on different blockchains and this could not go unnoticed. I am talking about the compatibility of blockchains, such as Binance and Ethereum Smart Chain, for example, and it was not clear to me what their meaning was, because they somehow existed separately, and I do not see any benefit from the fact that there will be some kind of multi-blockchain . Therefore, I decided to dig a little into this topic in order to understand who really benefits from this and for whom it is greater, for platforms or users.
I’ll start with the main question: what is the interaction of blockchains for?
There are many projects in the blockchain world, and each one tries to be better and more functional than the other, inventing its own code and consensus protocols, which makes them disconnected from each other. That is, by themselves, they represent a unique technical solution, but cannot interact with other projects. Also, the limited nature of their interaction is also affected by the fact that they are aimed at a certain industry, as in our usual life (someone works with agriculture, and someone, for example, with health care) and perhaps each other’s achievements could help them do their solutions are more scalable or secure, but they are faced with the lack of a conductor between them and everything stops there.
There are several more tasks that are solved when exchanging data between different blockchains:
- Solution of functional problems.
- Transferring data at higher speeds within the network.
- Scalability and performance.
- Data privacy.
In general terms, the meaning is clear, but how is it all implemented? I have found several ways to exchange between blockchains.
A blockchain bridge is a connection that allows the transfer of tokens between completely different networks, such as Binance and Ethereum, as well as between one parent blockchain and its child chain, called a side chain (which either works according to different consensus rules or inherits it security from the parent blockchain). Both chains may have different protocols, rules, and governance models, but a blockchain bridge provides a way for both parties to communicate securely.
- Gateway: Bridges allow users to transfer digital assets from Bitcoin to Ethereum. In addition, they run decentralized applications across multiple platforms.
- Scalability: Bridges provide greater scalability through transaction volumes, allowing developers and users to retain the liquidity and network effect of the original chains.
- Efficiency: Users can make and receive micro transfers without high transaction fees with tokens hosted on less scalable chains.