We understand blockchain as a decentralized ecosystem powered by distributed ledger technology. But as we dug deeper, we realized this was not a cumulative ecosystem. There are many blockchains in the market, and the ecosystems of each blockchain are isolated from each other. This is the necessity of the existence of digital currency cross-chain technology. It is a solution to improve inter-blockchain communication, and the cross-chain architecture promotes interoperability, allowing two or more blockchains to trade off their efficiency, decentralization, feature set, and security. Many investors still don’t know what are the benefits of this digital currency cross-chain technology? Let me introduce it to you below.
1. Decentralization:
Blockchain technology does not rely on additional third-party management agencies or hardware facilities. There is no central control. In addition to the self-contained blockchain itself, through distribution It adopts formal accounting and storage, and each node realizes information self-verification, transmission and management. Decentralization is the most prominent and essential feature of blockchain.
2. Openness:
The foundation of blockchain technology is open source. In addition to the private information of the transaction parties being encrypted, the data of the blockchain is open to everyone and anyone can Blockchain data can be queried and related applications developed through public interfaces, so the entire system information is highly transparent.
3. Independence:
Based on consensus specifications and protocols (similar to various mathematical algorithms such as the hash algorithm used by Bitcoin), the entire blockchain system does not rely on other third parties. , all nodes can automatically and securely verify and exchange data within the system without any human intervention.
4. Security:
As long as you cannot control 51% of all data nodes, you cannot manipulate and modify network data arbitrarily. This makes the blockchain itself relatively safe and avoids subjective artificiality. data changes.
5. Anonymity:
Unless required by legal regulations, technically speaking, the identity information of each block node does not need to be disclosed or verified, and information transfer can be carried out anonymously.
The interoperability challenges of blockchain technology are key areas that need to be addressed. Taking this as an opportunity, blockchain networks such as Polkadot, Cosmos, and Harmony are providing interoperability solutions for other blockchain networks. Several public blockchain networks, including Etherum, are focusing on interoperability and scalability, leveraging platforms such as Cosmos and Polkadot. Cosmos has launched the Inter-Blockchain Communication (IBC) protocol.
It facilitates inter-blockchain communication and enables token transfers between Cosmos and other IBC-compliant blockchains. Polkadot’s inter-chain messaging protocol uses Bridges for blockchain communication. Harmony serves as an interoperability solution that connects Ethereum and Binance Smart Chain to their ecosystems.
Recognizing the need for blockchain interoperability, even mainstream private blockchain networks such as HyperLedger, which hosts most enterprise blockchain applications, have turned to leveraging public blockchain networks such as Ethereum .
The above content is the editor’s brief analysis of the benefits of digital currency cross-chain technology. As enterprises, large enterprises, and startups increasingly adopt blockchain solutions in their operations; they realize that no blockchain protocol can exist completely exclusively or achieve its optimal efficiency. Just imagine how efficient your email service would be if you couldn't send messages from Gmail to Yahoo or Outlook. Interoperability between multiple email ecosystems makes email services as efficient as they are today. The same phenomenon of interoperability also increases the efficiency of operating systems, and the blockchain ecosystem also requires interoperability.
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