By its very nature Blockchain technology is built on peer-to-peer interactions across a shared distributed ledger. Blockchain technology offers promising results making the transformation from a siloed and fragmented approach to end-to-end value chain integration more attainable. But this adoption of communication lacks trust between the users which means that the importance of interoperability is imperative. Successful interoperability between blockchains will build trust between users allowing them to know that “what I see is what you see”. Although blockchain technology offers promising results, overcoming obstacles to widespread adoption remains a challenge since the technology is yet to reach its enterprise maturity.
Many existing solutions within the supply chain use blockchain relatively for simple use case while knowing that there is a various possible opportunity both within adjacent and the supply chain. At least a handful of blockchain platforms are expected to exist in the market enabling the entire ecosystem of applications to flourish. Other industries where blockchain could be relevant include finance, food safety, and insurance. Experts suggest that the technology hasn’t progressed for a single platform to dominate due to its lack of interoperability, some of which are technology choices.
Inter-blockchain communication has become a hot topic among blockchain developers as it ensures less dependency on technology choices across various supply-chain stakeholders. Hence, solving the challenges of interoperability on blockchain platforms both within the single system and across the systems would bridge new industries to adopt blockchain technology to their own choice of technology.
Interoperability of Blockchain technology
Interoperability- ( Inter operability )is a solution to technology such as blockchain to fit into any proposed technology. One of the main challenges would be the adoption of interoperability within the existing blockchain itself. Blockchain -to- Blockchain interoperability to solves communication challenges within a blockchain ecosystem. The two common challenges that blockchain still faces are
Digital asset exchange- This is the ability to transfer and exchange assets originating from the different blockchains without trusted intermediaries such as a centralized exchange. An example of this would be making bitcoins spendable in distributed applications (Dapps) built on Ethereum.
Exchanging arbitrary data- This is the ability to do something on one blockchain that affects another blockchain. Most arbitrary data are passive systems unable to produce a signature verifiable-by-others blockchain making interoperability more difficult to archive, however, new use cases enabled by arbitrary data exchange are more advanced than digital asset exchange.
Most existing blockchain lack cross-chain interoperability. However, there are various solutions to maintain communication between blockchain networks.
Sidechain is one of them with its consensus mechanism, security parameters, and tokens. Cryptocurrencies companies such as Polkadot and Cosmo were designed with the sole purpose of providing cross-chain infrastructure solutions.
Oracles- oracles provide solutions in bridging the gap between on-chain and off-chain environments. oracle services like Chain link and API3 provide interoperability between off-chain and blockchains using smart contracts on the blockchain.
Bridges and swaps- They are protocols developed on how communications between two chains should take place. The asset becomes a commodity on which tokens are built for trading. Since communications between blockchains are as protocols interoperability between different chains is achieved. This has paved the way for new applications that run on Decentralized exchange platforms (DEX).
