Interoperability of blockchain key to realising tech’s full potential
Cryptocurrencies are fragmented, each doing its own thing within its own blockchain, and not caring about the other coins out there. However, that’s not the way of the future
Arshad Khan is co-founder and CEO of Arabian Bourse Ltd
Currencies as we know them have changed – a lot. If you were to tell your great grandpa that one day money will be invisible, or more like digital, they would’ve ridiculed you, and probably asked you to stop watching sci-fi movies.
But we are now living in a world where there are millions upon millions of these currencies (which are referred to as Coins) on the internet. There was a time when there was only one API feed to get live pricing on one coin, now you need a fully functional server database to access the immense number of coins out there.
But you see, all of these coins are fragmented, each doing its own thing within its own blockchain, and not caring about the other coins out there. However, that’s not the way of the future, as fragmentation often leads to standardisation. But we’ll get to that in a minute.
First, allow us to reintroduce the idea of a blockchain. Blockchain’s potential has been obvious to many, as it can improve business processes, provide transactional transparency, and can even reduce operational costs, however, it’s being held back from mass adoption. So what’s keeping blockchain from accepting worldwide acclaim?
While many issues and concerns arise when talking about blockchain, we’ll be addressing one issue specifically which has to do with interoperability. Or rather, the lack of it.
As mentioned earlier, the idea of blockchain was designed to be a decentralized technology, so that means individual blockchains networks are inherently closed, and it’s very difficult for them to talk to each other. Each blockchain project has different characteristics that prevent them from communicating, such characteristics include types of transactions, hashing algorithms, and consensus models, among others.
The problem doesn’t stop there, unfortunately. The different networks and financial institutions working on different governance rules, regulatory controls, and blockchain versions, further deepen the problem. This resulted in a multitude of unconnected blockchains that are running simultaneously, but completely unconnected to each other, which is preventing this technology from reaching its full potential.
That’s where the idea of blockchain interoperability comes into play. So what exactly is interoperability? It’s as the name suggests, it’s the possibility of all these fragmented blockchain systems to communicate with each other. However, that’s not the whole picture, it also allows for the ability to share, see, and access the information in these splintered blockchains without the need for an intermediary – like what the stock system uses with a centralized exchange.
What this means, if a blockchain project wishes to add interoperability into its platform, it aims to create an ecosystem that allows different blockchains to communicate with each other with ease. This means that interoperability would include several functionalities and abilities such as: Integration with existing systems, initiate transactions on other networks, conduct transactions with other chains, as well as other such abilities.
This goes to show just how important, nay critical, blockchain interoperability really is. In a world where enterprises depend on an even greater level of collaboration and interaction, interoperability is a function that’s very crucial in any software system. So this brings us to just how much this technology is needed. But where exactly?
Blockchain interoperability would be especially needed in value chain industries, such as supply chain, trade finance, healthcare, aviation, and other such industries. One simple blockchain network would not cut it and would simply be unable to provide all the needs for any given transaction. Hence the need for many networks and connecting these networks is what makes this system worthwhile.
When there is a lack of something, there’s usually a growing demand for it, the same is applied to the idea of interoperability. That’s why dozens of projects have been created to address the lack of interoperability. These projects came into the picture to try and bridge the void between these siloed blockchains. The aim was simple, to facilitate interaction between networks and that the idea of a decentralizsd system is truly implemented.
There are many interesting projects such as Chainlink, Cosmos, Hybrix, Polkadot, and Wanchain. Other notable projects include Aion, Ark, ICON, Transledger, Cosmos and Overledger. The endgame is to create an ‘internet of blockchains’ – a network of blockchains that can easily talk with each other all in a decentralised manner.
So it would seem that the adaptability of blockchains is centred around the arrival of interoperability solutions. This may well in fact change how investors and industries view the idea of blockchains and will be an important step in convincing networks that the uninterrupted exchange of data is beneficial to the entire market. It’s like Andreas Antonopoulos said, “one network, many chains.”
As time goes by and more work is put into the interoperability between blockchain protocols, we’ll see more successful cross-blockchain projects. So, interoperability is the game-changer for the blockchain industry.
Arshad Khan is co-founder and CEO of Arabian Bourse Ltd
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Interoperability of blockchain key to realising tech’s full potential
Cryptocurrencies are fragmented, each doing its own thing within its own blockchain, and not caring about the other coins out there. However, that’s not the way of the future
Arshad Khan is co-founder and CEO of Arabian Bourse Ltd
Currencies as we know them have changed – a lot. If you were to tell your great grandpa that one day money will be invisible, or more like digital, they would’ve ridiculed you, and probably asked you to stop watching sci-fi movies.
But we are now living in a world where there are millions upon millions of these currencies (which are referred to as Coins) on the internet. There was a time when there was only one API feed to get live pricing on one coin, now you need a fully functional server database to access the immense number of coins out there.
But you see, all of these coins are fragmented, each doing its own thing within its own blockchain, and not caring about the other coins out there. However, that’s not the way of the future, as fragmentation often leads to standardisation. But we’ll get to that in a minute.
First, allow us to reintroduce the idea of a blockchain. Blockchain’s potential has been obvious to many, as it can improve business processes, provide transactional transparency, and can even reduce operational costs, however, it’s being held back from mass adoption. So what’s keeping blockchain from accepting worldwide acclaim?
While many issues and concerns arise when talking about blockchain, we’ll be addressing one issue specifically which has to do with interoperability. Or rather, the lack of it.
As mentioned earlier, the idea of blockchain was designed to be a decentralized technology, so that means individual blockchains networks are inherently closed, and it’s very difficult for them to talk to each other. Each blockchain project has different characteristics that prevent them from communicating, such characteristics include types of transactions, hashing algorithms, and consensus models, among others.
The problem doesn’t stop there, unfortunately. The different networks and financial institutions working on different governance rules, regulatory controls, and blockchain versions, further deepen the problem. This resulted in a multitude of unconnected blockchains that are running simultaneously, but completely unconnected to each other, which is preventing this technology from reaching its full potential.
That’s where the idea of blockchain interoperability comes into play. So what exactly is interoperability? It’s as the name suggests, it’s the possibility of all these fragmented blockchain systems to communicate with each other. However, that’s not the whole picture, it also allows for the ability to share, see, and access the information in these splintered blockchains without the need for an intermediary – like what the stock system uses with a centralized exchange.
What this means, if a blockchain project wishes to add interoperability into its platform, it aims to create an ecosystem that allows different blockchains to communicate with each other with ease. This means that interoperability would include several functionalities and abilities such as: Integration with existing systems, initiate transactions on other networks, conduct transactions with other chains, as well as other such abilities.
This goes to show just how important, nay critical, blockchain interoperability really is. In a world where enterprises depend on an even greater level of collaboration and interaction, interoperability is a function that’s very crucial in any software system. So this brings us to just how much this technology is needed. But where exactly?
Blockchain interoperability would be especially needed in value chain industries, such as supply chain, trade finance, healthcare, aviation, and other such industries. One simple blockchain network would not cut it and would simply be unable to provide all the needs for any given transaction. Hence the need for many networks and connecting these networks is what makes this system worthwhile.
When there is a lack of something, there’s usually a growing demand for it, the same is applied to the idea of interoperability. That’s why dozens of projects have been created to address the lack of interoperability. These projects came into the picture to try and bridge the void between these siloed blockchains. The aim was simple, to facilitate interaction between networks and that the idea of a decentralizsd system is truly implemented.
There are many interesting projects such as Chainlink, Cosmos, Hybrix, Polkadot, and Wanchain. Other notable projects include Aion, Ark, ICON, Transledger, Cosmos and Overledger. The endgame is to create an ‘internet of blockchains’ – a network of blockchains that can easily talk with each other all in a decentralised manner.
So it would seem that the adaptability of blockchains is centred around the arrival of interoperability solutions. This may well in fact change how investors and industries view the idea of blockchains and will be an important step in convincing networks that the uninterrupted exchange of data is beneficial to the entire market. It’s like Andreas Antonopoulos said, “one network, many chains.”
As time goes by and more work is put into the interoperability between blockchain protocols, we’ll see more successful cross-blockchain projects. So, interoperability is the game-changer for the blockchain industry.
Arshad Khan is co-founder and CEO of Arabian Bourse Ltd
Follow us on
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