How Blockchains and Cryptocurrencies can become interoperable and integrated

Interoperability could combine many separate platforms. Will this create a universal blockchain or integrate platforms on a smaller scale?

With the advancement of blockchain technology, users and developers are getting the chance to choose from an ever-increasing number of options. From the introduction of Bitcoin in 2009, hundreds of different cryptocurrencies and blockchains were born.

Although each project has a unique selling point, many share a number of basic features. Almost all blockchains can handle tokens and transactions and the latest blockchains can run smart contracts and decentralized applications.

These common characteristics have inspired a series of projects that seek to unite blockchain platforms that would otherwise remain separate. In other words, these projects try to get what is called interoperability.

The purpose of this discipline is vast. Interoperability can imply adherence to small-scale blockchain platforms, or it may imply that different versions of a single platform work perfectly. However, many interoperability projects are trying to develop a "holy grail" of sorts: a universal network of all-encompassing blockchain.

It remains to be seen which of these approaches will end. But for now, let's take a look at some ways in which interoperability could improve blockchain technology.

Perhaps the biggest problem that cryptocurrency has to face at the moment is the fact that no coin or token is universally supported. Although Bitcoin has become a standard in commercial transactions, this is not true of any use case. This is reflected in blockchain applications: most blockchain-based dApps support only one type of coin.

One way around this is to create "bridge cryptocurrencies", allowing tokens to be transferred through blockchains for which they have not been designed. W-BTC, for example, is a currency based on Ethereum which is linked to the price of Bitcoin. This allows Bitcoin to be integrated with the Ethereum dApp, significantly increasing the possible use of Bitcoin.

The versatility of W-BTC is achieved through a combination of pegging prices and decentralized exchanges: the project essentially allows a similar Bitcoin to circulate on Ethereum or be redeemed for appropriate Bitcoin at any time.

W-BTC integrates only two different projects: Bitcoin and Ethereum. But in theory, any two cryptocurrencies could be combined this way. There are many similar projects: EOS 21 transfers the Ethereum token to EOS, for example, and Dogethereum transfers Dogecoin to Ethereum.

However, universal interoperability is also possible. Indeed, this is usually what the projects mean when they say they provide interoperability. Ripple & # 39; s Interledger, for example, is a blockchain-based network that can handle almost any type of cryptographic token or fiat currency.

Since most payment processors handle only a handful of cryptocurrencies, this is an important result. Dozens of applications have been created on Interledger and this type of flexibility can allow universally interoperable transactions if Interledger becomes quite prominent.

In addition to performing simple transactions, many modern blockchain platforms also run programs. Originally, Ethereum was the only blockchain that allowed developers to program decentralized applications (dApp) and smart contracts. However, Ethereum now has many competitors, such as EOS, NEO and Tron, which are programmable in the same way.

These options allowed some developers to move their apps to alternative platforms. However, it takes time and effort to move a dApp to a second blockchain, since most blockchains have their own unique programming language. In fact, one of EOS's initial goals was to execute contracts written in the Ethereum Solidity language, eliminating the need for developers to recode their app for different platforms.

Although EOS has abandoned this function, other tools offer similar functionality. For example, Hero Node allows developers to "write once" and "run anywhere", which means developers can quickly deploy an application across various platforms, including Ethereum, EOS, and Qtum. This saves developers some of the problems associated with choosing which blockchain to develop.

However, this approach simply makes a portable app and the app remains isolated on every blockchain. The alternative is to make applications on different functionally interoperable blockchains. Polkadot, for example, allows apps on a blockchain to interact with smart contracts on a second blockchain.

This allows blockchain apps to work together to complete tasks that they are not able to do on their own. This would also eliminate the need for developers to move entire apps between blockchain platforms when they exceed them – instead, an application might be based partially on different blockchains as needed.

Although the universal interoperability of blockchain would be a great advantage for adoption and usability, it is not clear that it is actually reachable. Many platforms aim for universality and there is no guarantee that any of these platforms will be widely adopted. After all, platforms that aim to become universal are competing with each other.

Furthermore, some argue that what most projects call "interoperability" is actually integration between selected platforms. Chris Ferris, an engineer at IBM and a member of the board of Linux Hyperledger, writes that truly universal interoperability is unlikely:

True interoperability between platforms … would require the development of "one single API protocol to govern them all" and get each platform to adopt it in a consistent manner. Even if we could, it would take years. There are dragons.

According to Ferris, Hyperledger provides a more limited (and more achievable) form of interoperability. Because Hyperledger is a highly editable open source product, more critical issues are at stake than interoperability with other platforms.

For example, Hyperledger is meant to be backwards and forwards compatible with different versions of itself. It is also intended to be compatible with Hyperledger-based offers from different suppliers. Substantial work is required to ensure maximum effectiveness of the cross-version integration of Hyperledger.

Since Hyperledger serves as a business blockchain, it is not clear what Ferris provides for public blockchains and their users. But its central idea is generally applicable: a highly regarded system that becomes a lasting basis for other projects could prove to be more popular and widely used than a system that deliberately aims to become universal.

Interoperability could solve some of the biggest adoption problems that the blockchain world is currently facing: the countless choices available to users and developers. The fact that these choices are often exclusive and incompatible does not help things.

A universal solution could effectively combine previously divided projects. However, it is still under discussion which approach will win interoperability: projects that aim at a basic but broad universality, or projects that attempt a deep and in-depth interoperability on a smaller scale.