Disclaimer: The Industry Talk section contains insights from crypto industry players and is not part of the editorial content of Cryptonews.com.
Interoperability has been used a lot lately regarding the blockchain space. It simply means that two or more blockchains can coexist and operate with each other.
The blockchain space is currently fragmented, with many isolated chains operating on their own – a universe unto themselves. For example, if one NFT is created on one blockchain and the other on another, it is difficult to exchange the two NFTs as they are based on somewhat different protocols. It’s similar to installing an Android app on an iPhone – it’s simply not possible.
For example, when Ethereum came into existence, the developers did not think about the idea that Ethereum’s blockchain would have to be connected to other blockchains in some way. In other words, Ethereum cannot operate with other chains, which is a major obstacle. The same goes for the Bitcoin blockchain, which made the first major breakthrough, as its mysterious creator, Satoshi Nakamoto, could not have predicted how things would develop. Little did he know that many other blockchains would be used for much more than just cryptocurrencies.
But that is slowly changing, and many popular chains, including Ethereum and Bitcoin, are being redefined to allow interoperability.
Cross-chain trading is a big problem
Cross-chain trading is the ability to trade cryptocurrencies from different blockchains. The good news is that some projects can benefit from the chains being re-engineered with an eye towards interoperability.
Such a project is called Primex, which is a cryptocurrency exchange currently under development. During the first phase, Primex will only be available on Ethereum, but the second version will also be distributed on networks compatible with Ethereum. That way, Primex users can trade cryptocurrency pairs across different chains.
Is the future interoperable?
All sides in the blockchain and DeFi spheres have realized that they can gain much more by enabling interoperability than by keeping blockchains separate. It is safe to assume that the Bitcoin network will not progress towards interoperability anytime soon, as it is large enough to be self-sufficient. All other blockchains, including Ethereum, can only benefit from interoperability.
Therefore, it is safe to assume that all new projects built with blockchain will be created with interoperability in mind, and the existing ones will evolve as much as possible to communicate with other blockchains.
Some projects are already focusing full-time on solving the interoperability problem, with varying degrees of success. The most successful companies at the moment are probably Cosmos and Polkadot, but we should also mention Harmony, WanchainChainlink, Hybrix and even Loom Network.
Interoperability as a basis for Web3
Web3 or Web 3.0 has been one of the big buzzwords lately, and it refers to the new version of the internet, which will be completely decentralized. Of course, to achieve that, we need all sides to cooperate, starting with making blockchains interoperable.
In a sense, we need to create a network of decentralized networks to lay the foundation for the third version of the internet. This is likely to happen as blockchains slowly open up, but it seems like it will take some time for it to be fully exploited.
According to most optimistic predictions, Web3 will begin to manifest by the end of 2022, but it is only a start, as there is a lot of work to be done before it becomes a reality.
Interoperability is not a myth. It is already happening across the blockchain and DeFi space, with many chains being interoperable with many other chains. In fact, some are already so interconnected that they created a blockchain, making it easy for users of all interoperable chains to transact across chains.
However, we are still not there when it comes to full interoperability, where all blockchains are interoperable with each other. Is this even possible? Will we ever reach the Web3 utopia? It remains to be seen.