Blockchain Next Steps – Building Interoperability On Blockchains
Whew. We can all finally take a breather and relax for a minute because most of the largest projects on the market have FINALLY released their main nets by now – right? Well, not exactly.
While the crypto market has achieved huge things already in 2020 and 2021, there is still a massive, I mean massive elephant in the room. Awkwardly, none of us can talk to each other about the elephant either! It’s almost as if we need to learn how to communicate to one another in order to solve the worlds largest problems together.
Nothing should be considered investment of financial advice. Enjoy the ride.
Building Interoperability On Blockchains
But wait you might be thinking. How come we can’t talk to each other about the elephant? By “we” I mean blockchains and by “elephant” I mean the disconnected data hosted on separate blockchains.
(que the Vsauce noise)
Lets break this down. Blockchains are great because they are decentralized (in theory at least) and that means that the chains hold, store, and continues to bring in immutable data. This data is made up of random things like transactions, the chain’s ledger, messages, and sometimes parts of smart contracts by there is much more.
Anyways, the point is that the blockchains like Ethereum, Cardano, Tron, EOS, and a few other projects enable smart contracts. Smart contracts enable people to write agreements that are executed after an event, outcome, circumstance, or what have you.
This is great until a smart contract needs additional data not on the native chain. Unfortunately, that data might be… on another blockchain.
Or sometimes those smart contracts need value in terms of crypto. For instance, what if a smart contract needs to convert Bitcoin for Ethereum?
Anyways you get the picture. These things can’t “happen” yet autonomously and without a third party like an exchange which is kind of a problem.
To enable them to be able to run these kind of smart contracts, what do blockchains need? What do they need in order to be able to communicate?
Communication Between Chains
At the end of the day, in order for smart contracts to be effective they need to be able to send and receive data collectively.
Not only data, but they need to be able to convert currencies, initiate code, and do so in a matter of efficiency across multiple layers of different chains. This seems like a lot. In addition to that, there needs to be an authenticator of this new data, a recollection of the values transacted, and a way to store it all for a ledger. Quite the conundrum.
Basically, we are saying we need an internet of blockchains. A place where everything can talk to each other, a place where chains can interact and evolve together and benefit from one another.
Internet of Blockchains Meaning
This phrase has been thrown around quite a bit. A few projects like Polkadot, Cardano, and many others have been called it but what does it mean?
The phrase “Internet of Blockchains” means a place or concept that enables multiple blockchains to communicate their data, transact value, and store all of it efficiently as a record. Not to mention execute smart contracts across all chains, and at any time being able to verify the data being input across chains for contracts.
The data verification process is mostly handled with oracles which would be a project like Chainlink. This protocol enables blockchains to pull verified and trusted data to use for their contracts. Other projects like IOTA are building their own internal oracles, but regardless, the Internet of Blockchains will need this feature.
Clustering of Chains
If you have read some of my older posts, then you will know the phrase clustering of chains.
Personally, I think this will be the temporary solution to this problem until a project comes along and takes the medal of “Internet of Blockchains”.
A cluster of chains would be if Cardano, IOTA, and VeChain all got together, built bridges to one another to transmute data and tokens, and then went live to smart contracts enabling autonomy. This would be huge for the market, but even more so for the token economics. People would be able to write contracts that could be settled in IOTA, ADA, or VET.
The possibilities are endless. Long-term there will need to be a more global solution similar to what Polkadot is doing with their Para-chains. Charles Hoskinson of Cardano even commented that Polkadot is what Ethereum 2.0 should have been. If you want to learn more about that project then click the link right above. That posts goes into detail about their para-chain solutions.
Only time will tell who comes out on top. Although, the first project to solve this problem will be essentially just that – the Internet of Blockchains. The next Google of data and value.
Interoperability On Blockchains
Thanks for reading my post on Interoperability On Blockchains. There is so much to dive into given this topic, but I just wanted to do a general overview for those that have been asking. As always, enjoy the ride.
Cheers
