In its relatively short existence, blockchain technology has already seen a few iterations. The first was ushered in with Satoshi Nakamoto’s seminal invention of Bitcoin — which, at its core, is a protocol for transferring value.
Then in 2015, Ethereum made versatile smart contracts a reality.
What we need to strive towards is the true third-generation of blockchain: cross-chain interoperability.
With the onslaught of new blockchains, we’re falling into one of the traps the technology was meant to mitigate — a fragmented landscape. Interoperability is key to ensuring that the technology thrives and streamlines transfers of value, information and digital property.
Lack of compatibility between chains is something that needs to be addressed before any meaningful progress can be made. Enabling blockchains to interact would eradicate issues pertaining to poor liquidity, and broaden the scope of decentralised operating systems.
To visualise the concept, consider an enterprise that runs on a local network. Within this network, many things are possible — employees can code software to do a number of things, be it encrypting files or automating various tasks. This works well, but only within a bubble: there is no contact with the outside world. This is an intranet, which many blockchains are aiming to create.
With an internet connection, however, the possibilities for such an enterprise become infinite — they have access to a whole wealth of information that can serve to enrich their operations. They can work synergistically with similar businesses, and exchange data. This is an internet, and this is what we need to be building for blockchains.
Today, there’s been some notable moves made in this domain, although not as many as one would hope — the vast majority of developer talent in the space is focused on creating new blockchains. Worthy mentions of projects attempting to tackle the interoperability problem are those working on submarine swaps (within the Lightning Network) and Ethereum’s team, designing the Plasma protocol (although this has yet to see much by way of tangible application).
Interoperability is definitely one of the slower moving fields in blockchain, but it’s one that is poised to deliver some of the most meaningful results, by connecting protocols that are currently functioning in a void. We need to stop building upwards, by bolting everything onto the same chain, and start to build outwards, so that the hundreds of blockchains in existence can begin to interact with each other and usher in the third-generation of blockchains.