The realization that there isn’t a single appropriate answer that can fully address all of the demands related to blockchain technology simultaneously is another factor contributing to the rise in the number of emerging blockchain platforms.
The connectivity of these distinctive blockchains is increasingly required as more enterprises get acquainted with this emerging technology and its advantages.
Annually, new blockchain networks are created to address particular market gaps within specific sectors; each blockchain has specialized functionalities depending on its goal.
Layer-2 scaling systems, such as Polygon, are designed to have extremely cheap trading fees and quick payment periods.
Let us now take a look at the meaning of Blockchain Interoperability.
What is Blockchain Interoperability?
The term “blockchain interoperability” refers to a number of techniques that let various blockchains connect, exchange digital assets and data, and collaborate better. As a result, the commercial operations of one blockchain network can be shared with the other.
For instance, interoperability enables the use of a decentralized cross-chain bridge to transfer data as well as assets between several blockchain networks.
Since users won’t have to transfer networks, interoperable smart contracts will simplify things for them to enjoy numerous decentralized services.
Assume, for instance, that a user wishes to deploy a lending protocol on Polkadot and uses a dApp on Ethereum. A dApp built on Polkadot can execute an interoperable smart contract on Ethereum.
However, interoperability involves more than just blockchain connection. Smart contracts and protocols can communicate with one another.
For instance, the smart contract custody platform t3rn enables smart contracts to function across various blockchains. To achieve this, smart contracts are distributed and operated on several blockchain networks after being housed on a smart contract network. Building cross-chain applications are made simpler for programmers by interoperable smart contracts.
Why is Interoperability the key to blockchain technology’s mass adoption?
1. Blockchain interoperability will increase productivity across the board for the whole crypto industry. Users can quickly transfer information and assets between blockchains, increasing accessibility for all parties.
Oracles will provide real-world information across several networks, and reasonable arrangements can run on multiple networks rather than becoming bound to a specific blockchain.
Interoperability will provide the basis for broad blockchain adoption and usage when combined with the advantages of open decentralized blockchains.
2. The exchange of digital assets across blockchain networks also requires interoperability. The adoption of cross-chain bridges is among the most popular ways to accomplish this. In plain English, cross-chain bridges allow users to transfer tokens between blockchains.
The capacity to easily move assets between blockchain networks is a key benefit of interoperability.
Co-founder of the non-fungible coin and Web3 infrastructure and security project Pastel Network, Anthony Georgiades, told Cointelegraph.
“Given the variety of data and assets present in the crypto ecosystem, interoperability is crucial for the blockchain sector. Transfers between various token or asset types must be made possible by decentralized cross-chain bridges.”
Customers can utilize Bitcoin (BTC) on the Ethereum blockchain as Wrapped Bitcoin, for example, thanks to wrapped tokens (wBTC). Since clients can connect with DeFi without purchasing a site’s native currency, which might be more hazardous than stablecoins or blue chip currency such as BTC or Ether, this is crucial in the DeFi market (ETH).
3. Because blockchains act autonomously from one another, it is challenging for consumers to profit from what each network has to offer. To engage in their network protocols, they must have tokens supported by each blockchain to achieve this.
This issue can be resolved through interoperability by enabling consumers to utilize the very same token on different blockchains.
Additionally, by enabling communication between blockchains, users can more quickly leverage the protocols of other blockchains. This increases the likelihood that the firm’s worth will increase in the future.