Cross-Chain Technology Hopes To Solve Blockchain Scalability Issues

As an emerging technology, Blockchain has brought numerous opportunities that continue to reshape the world as we know it. Developers continue to find innovative ways to harness the power behind Blockchain to bring out DeFi, GameFi, supply chain operations, blockchain-based Healthcare, and more. Some have merged Blockchain with other technologies, such as Artificial intelligence (AI) and the metaverse, to bring groundbreaking results.

Over the last couple of years, applications such as Bitcoin, Solana, and Ethereum have seen significant growth. However, with a lack of communication between the different Blockchain, this growth could not scale up further.

Amidst the proliferation, developers and users of blockchain projects have not had an easy time because different blockchains operate in isolation. Simply put, different blockchains do not allow communication with each other, making it impossible for developers to use different blockchain resources.

Recently, developers found ways to address the issues and allow communications with the different Blockchain. The solution lies within cross-chain technology!

What is cross-chain technology?

Cross-chain technology can be defined as a solution that facilitates the transfer of value data between two or more blockchain networks. As previously mentioned, the different blockchains operating in isolation make it impossible for users to enjoy the benefits of ledger technology fully.

Cross-chain technology allows for blockchain interoperability, acting as a bridge between blockchains to allow users to communicate and share data. The process does not require intermediaries and works on the principle of atomicity.

Notably, this technology works differently from one network to another. This is because each network uses a different system of blockchain interoperability to facilitate transactions. The entire process takes place at a minimal cost without any downtime. There are two popular methods to facilitate cross-chain operation between isolated transactions across various chains. These include Atomic Swaps and relays. However, other approaches can be employed, such as the Merged consensus, Stateless SPVs, or Federation, depending on the functions of the transactions.

Benefits of cross-chain technology

In addition to delivering blockchain interoperability, cross-chain technology links two separate blockchains allowing for efficient communication between the networks. Notably, since the link is used for asset transfer and token swaps, blockchain incompatibility has no scope.

Secondly, cross-chain technology enables better scalability allowing users to leverage the speed concerning multiple blockchains. There is a fast flow of data and transfer of tokens. Initially, users needed to send instructions to form the source chain, which validators relayed to the destination chain. However, thanks to cross-chain technology, the transaction is verified immediately after completion, arriving faster at the destination.

For instance, this has come in handy for the Healthcare sector, which previously relied on a centralized system. Most healthcare facilities cannot share needed data in time, and those who do have to incur huge transaction fees. These facilities can alleviate these challenges through cross-chain and Blockchain technologies and serve their clients more efficiently.

Another advantage is that this technology discourages monopolization by large entities. Cross-chain technology helps bridge the gap between large networks like Bitcoin, a dominant player in the market, and new players. This link allows new players to experiment with strategies by dominant players getting a fighting chance to secure their place on the table.

Since its inception, cross-chain technology has also massively helped with the mass adoption of blockchain technology. By making it easy for users to interact with different blockchains, cross-chain technology allows new users to explore different applications across the board easily.

The future looks promising for this technology. Experts believe interoperability across Blockchains will create a decentralized and secure system in the coming days. In addition, the rise of multi-token wallets implies that total interoperability can be achieved. This paves the way for a future where a user will use a single wallet to make all their transactions.