Blockchains resemble the internet scenario in the early 90s. The internet, along with its enormous power, was on the brink to change the world but was still unexplored with its infinite possibilities.
The intranet predecessors of the internet were not then able to communicate with the other systems or networks. Blockchains, too today, lack this competence to communicate with other systems or blockchains. This resultantly has positioned them as a stagnated data vault, depositing valuable information, and limiting myriad possibilities.
The internet got real thrust and massive adoption when a communication tool like email was invented. It accelerated the ways of global communication with the fastest ever exchange of information.
In today’s age, we have blockchains at the advent of similar aspirations to connect and share information to grow throughout the ecosystem.
Initially, blockchains were built with an all in one purpose with a single chain including transactions, or smart contracts everything on that sole entire chain, but such system won’t be a solution to various applications with its constrained use and scalability limits.
Blockchains operate like an isolated remote piece of the island that can’t acquire external information to communicate and process them on their own.
Despite its highly promising future, blockchain faces some challenges and hindrance, which includes its inability to communicate or to share data with other blockchains.
Cross-chain communication is the interoperability between two relative blockchains. It is an essential aspect while building application-specific blockchains. For effective and smooth functioning, the purpose-specific blockchains need to exchange and adjust their features, security, and amount of decentralization, more or less, as per the necessity of that particular application.
Cross-chain communication thus is an essential feature to verify transactional data across multiple chains and exchange data and assets without third party interference.
Efficacy of Cross Chains
Interoperability between blockchains will bring in more efficiency, more scalability, and more utility and will make them more user-friendly. It will connect many disconnected blockchains and will form a bridge between services and the networks, improving market competency and enhanced user experience.
The cross-chain interactions are divided into two main types:
- Isomorphic cross chains
- Heterogeneous cross chains
Isomorphic cross chains: Isomorphic cross-chain interactions differ from heterogeneous ones with various technological features, including a security system, network topology, consensus algorithm, block generation verification logic, etc. These functions are consistent and simpler.
The heterogeneous cross-chains: This interaction mechanism is comparatively complex based on the PoW algorithm for Bitcoin and PBFT consensus algorithm for Tendermint. It also needs third party support.
Approaches to Cross-chain Communication
While the cross-chain communication process takes place, it implements five major approaches:
- Atomic swaps
- Stateless SPVs
- Merged consensus
Atomic swaps allow peer to peer single crypto exchange trading via Hashed TimeLock Contracts (HTLCs). This is not ideally cross-chain communication, but it is a system where transactions are done across chains. This mechanism enables Lightning Network and can be an effective approach for communication.
Relays permit contracts of verification of block headers. It may verify history or specific information and events on other chains. They are expensive to operate like we have BTCRelay.
They are less expensive to operate and allows smart contracts to verify a subset of PoW origin history. The Summa conceptualized them.
They are powerful and allow two-sided interoperability between chains via the relay chain. Cosmos and ETH2 projects use merged consensus.
Federations allow confirmation of events on one chain on another for trusted groups. They, too, are powerful but require third party trust. Federations are used by Blockchains Liquid to support the usage of synthetic Bitcoin.
Major Projects on Interoperability solutions
Cosmos funded by a Switzerland based InterChain Foundation (ICF) is a major name in this arena, which was conceptualized by Ethan Buchman, who has also invented MS thesis-Tendermint to improve the PoS protocol. It has built a software development tool and aims to become the main force behind all large projects. It has $1 billion worth of Bitcoin assets.
Blocknet is building a fully decentralized exchange for interchange communication aiming to decentralize order matching, order broadcasting, deposits, and actual coin exchange components.
Ethereum founder Gavin Wood is associated with Polkadot, so the focus is on transferring smart contract data. It has a technology focus approach and has raised $220 million assets via Ethereum ICOs to date.
Aion is associated with the Canadian NUCO blockchain enterprise with Vitalik Buterin as their advisor. Aion has long term plans to incorporate artificial intelligence into a consensus model for the administration regulatory purpose. It has launched its mainnet in April this year and raised $23 million through crowd sales.
Apart from the above projects, Lamden, Metronome, Wanchain, ICON, Ark, Block Collider, and Quant Network are also some of the significant projects in interoperability solutions.
Presently Cross-chain projects are in an innovative and exploratory mode, and the future will decide their application based development.