Blockchain Interoperability
A blockchain refers to a system in which records of transactions, particularly transactions made in cryptocurrency, is maintained across computers that are linked in a peer-to-peer network. A blockchain, although popularly used by cryptocurrency, is not limited to only that; it can also be used to make data in any industry immutable.
Blockchains are like computers without an internet connection; they are self-contained and do not have built-in capabilities to communicate with other blockchains. This limitation is called the oracle problem, which refers to the conflict between security, authenticity, and trust in third-party oracles and the trustless execution of smart contracts.
The Oracle problem prevents blockchains from interacting with traditional systems and prevents interoperability between blockchains.
What is Blockchain Interoperability?
Blockchain interoperability simply refers to a blockchain’s ability to interact and exchange data with other blockchains. With the help of interoperability, multiple chains can communicate and share data; this in turn makes it more convenient to use different blockchain networks.
Blockchain interoperability rests on the foundation of cross-chain messaging protocols; we can’t talk about one without the other. Cross-chain protocols make it easier for information exchange between different blockchains, which enables them to read data from and write data to one another.
How does Blockchain Interoperability Work?
It all lies in the cross-chain protocol which enables sharing across multiple blockchain networks and streamlines their ability to make a pact and work together. This means users can communicate directly using the cross-chain protocol, thereby allowing blockchains with similar networks to exchange value and information.
It is important to understand that networks vary since no single approach can be used when it comes to cross-chain interoperability. Each network has to rely on utilizing its own distinctive method to carry out transactions without a third-party interface.
Atomic swaps are also worth mentioning when it comes to understanding how interoperability works. Atomic swaps allow two parties to exchange tokens across multiple blockchains, eliminating the need for a third party. Furthermore, blockchain networks use relays to monitor activities going on other chains. Relays operate on a chain-to-chain basis that enables a single contract to become a central client or point for other nodes across other chains.
This allows rapid validation of specific central headers and the details of all transactions performed. The only downside of using the relay method is the cost; operating and maintaining the security usually requires a heavy price.
Benefits of Blockchain Interoperability
- Enhanced Collaboration Across Industries
There are a number of things that can be done on the blockchain, but these things can only be carried out seamlessly if there is data transparency, verifiability, proper smart contract execution, and decentralized consensus.
The interaction of blockchains used by different organizations and industries would be a major leap as it would be able to fuse independent markets and business applications that were at extreme ends of the line together.
This would lead to more productivity and output; industries and organizations that wouldn’t normally interact with one another would be able to share ideas and capitalize on each other’s strengths.
- Customizable Web3 Services
Web3 services are now essential and thriving in the blockchain ecosystem. They are like scattered pieces that if brought together, can all blockchain protocols and applications to mix and match and in the process create entirely new Web3 platforms and tools. This wasn’t exactly possible in the Web2 era.
Interoperable smart contracts could completely change the way industries like healthcare, law, real estate, and more operate. Since interoperability enables communication between various blockchains, it can allow for the exchange of valuable business ideas between public and privately owned networks, bringing about customization and control.
- A More Decentralized Ecosystem
While a lot of blockchain projects put pure decentralization within their individual networks on top of their list of priorities, the very ability to achieve network interoperability across multiple blockchains displays a more advanced realization of blockchain technology’s promise to decentralize systems and economies.
Take for example, that instead of having to rely on a single blockchain network like Ethereum to handle all transactions for thousands of decentralized apps, interoperability could make it so that thousands of application-specific blockchains interact with each other seamlessly through a decentralized central hub.
Security Challenges of Blockchain Interoperability
Some security challenges associated with blockchain interoperability include:
- Denial of Service (DoS) Vulnerabilities in Atomic Swaps
As mentioned earlier, atomic swaps allow two parties to directly exchange tokens across multiple blockchains, eliminating the need for a third party. However atomic swaps are vulnerable to Dos attacks. In the context of interoperability, a malicious actor could seize control and lock assets, since the initiator of the swaps can control the whole process and has the authority to terminate the transaction.
- Incompatible cryptographic methods
Interoperable blockchain networks may use different variations in their native algorithms and have functions. This has the potential to cause complexities and transaction-related issues as a result of the system having to handle multiple native algorithms
- Private Key Attacks
The private key is an essential part of any account that must be guarded properly, when a malicious actor gains access to a private key, troubles start to boom. To safeguard a private key, proper encryption mechanisms are crucial. However, it is still a user’s primary responsibility to securely store their private key, even with great security systems in place.
Seamless interaction between systems is a thing across the landscape of technology now, from our computers being linked with our mobile phones and other devices in a very interactive and responsive way to our houses being connected with the furniture in it. The blockchain too is achieving that by interoperability, a true game changer for the industry, a universal language for the digital world.
