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Blockchains need to work together in order for end users to have the kinds of utility that take the sector to the next step.
If a crypto asset or Non-Fungible Token can’t be easily and cost effectively routed or transferred to exploit desired services, that’s a problem.
Developers are working on expanding the interoperability of blockchains, and more needs to be done for the industry to continue to mature and grow its user base into the mainstream.
Blockchains not named Bitcoin and Ethereum may tout faster transaction times for their networks, lower costs, smart contract software app features, and more environmental friendliness.
But if they don’t easily “speak” to the Bitcoin and Ethereum networks, they are effectively siloed from the two leaders that have the lion’s share of users and market cap value.
Some blockchains are working on specific compatibility projects with Bitcoin and Ethereum.
This past week, for example, Algorand CEO Staci Warden announced that 10 million would be awarded to developers to deliver solutions for that blockchain to interact more seamlessly with the Ethereum network via Ethereum Virtual Machine (EVM) technology.
An EVM component would allow, for example, apps and NFTs created on Ethereum to be easily routed, run, traded, etc on the Algorand blockchain. To understand the scope of what NFTs can do, check out the recent Trends Journal article “NFTS: MUCH MORE THAN DIGITAL ART” (15 Feb 2022).
Some blockchains, like Polygon, already have EVM compatibility (see “GAMING EMPIRES TO BATTLE UPSTART NFTs?” 19 Oct 2021).
Cosmos, Chainlink and Quant Promise Comprehensive Interoperability
Several crypto token fueled projects have a core focus on building technology that allows data and assets to flow between blockchains, and even beyond.
Cosmos (with an associated crypto token called ATOM) bills itself as “the internet of blockchains.” The Cosmos SDK (software development kit), offers a platform for creating unique, application-specific blockchains.
Instead of having several apps operating on a central chain, any project may create its own blockchain, which is then linked to the rest of the network.
There are currently over 260 applications and services operating in the Cosmos ecosystem including those of some major crypto networks like Binance Smart Chain, Crypto.com, Polygon, Terra, and Oasis Foundation according to financemagnates.com.
The Quant network is an even more ambitious and possibly consequential technology. Via something called the “Overledger DLT gateway,” the project is facilitating the ability of virtually any Distributed Ledger Technologies (DLTs), including blockchains, but also other systems like Hedera Hashgraph, the enterprise-leading non-blockchain based DLT, and current corporate and governmental networks, to talk to each other.
Companies like database powerhouse Oracle, and Microsoft’s Hyperledger are just two systems that can integrate with blockchains via Quant’s Overledger DLT gateway.
Quant network tokens (QNT) must be acquired and used by developers who want to build on the platform. Overledger read and write activity done by developers also requires QNT tokens.
The tokenomics of the Quant token, limited to 14.6 million that will ever be issued, also make it attractive.
Chainlink offers a different kind of interoperability—that between blockchains and real world data.
The Chainlink token (LINK) incentivises a worldwide network of computers to provide trustworthy, real-world data to smart contracts built on top of blockchains.
Many smart contracts depend on some form of external data source to correctly execute their terms.
Chanlink rewards data providers (called “oracles”) for acting as a link between blockchain smart contracts and external data sources.
Because each oracle in the Chainlink network has a reputation score, it is encouraged to supply correct data, according to Kraken.com.
Nodes are also compensated in Chainlink’s cryptocurrency, LINK, when they obey the software’s rules and offer important data.
There’s little doubt projects that are able to offer efficient solutions to facilitate interoperability, will be in growing demand as blockchain technology itself continues to innovate.