EXPLAINER: Decrypting blockchain interoperability and what can it bring altogether

While blockchain is believed to have found usage, the question seems to remain how interoperable it can be. Blockchain interoperability, which refers to data-based interactions among blockchains, carries potential to develop decentralised applications (dApps) for different use cases. “I believe blockchain interoperability refers to the capacity of blockchain networks to communicate, interact, and exchange information. It is considered crucial as it facilitates collaboration and connectivity among blockchain platforms,” Alankar Saxena, co-founder and CTO, Mudrex, a crypto-investing platform, told FE Blockchain.

From what it’s understood, blockchain interoperability can help with cross-chain asset transactions and create interconnected smart contracts. According to Chainlink, a decentralised network, blockchain interoperability’s cross-chain messaging protocols can create cross-chain dApps, which allows a certain dApp to be active across different smart contracts. The network further stated that blockchain interoperability can give rise to various cross-chain dApps such as cross-chain non-fungible tokens (NFTs), cross-chain decentralised money markets, cross-chain decentralised exchanges (DEXs), among others. 

“I think blockchain interoperability increases transparency and traceability of data across blockchain networks. It can also increase value of multi-chain tokens, as they can be used across networks as a means of payment for earning yields, facilitating transfer of NFTs across blockchain networks, among others,” Kumar Gaurav, founder and CEO, Cashaa, a blockchain company, stated. 

Reportedly, market-based blockchain interoperability facilities present are contract calls, native payments, programmable token bridges, token swaps, and token bridges. With regard to corporate structure, blockchain interoperability can give birth to cost minimisation schemes. Insights from 101 Blockchains, a blockchain-based research platform, highlighted that blockchain interoperability can allow companies to maintain client-based connections. It’s believed that blockchain’s influence on client-company relationships can guarantee absence of expensive transaction costs, to ensure value transmission. Currently, platforms which endorse blockchain interoperability are Wanchain, Polkadot, Hybrix, among others. 

To conclude, experts believe that blockchain interoperability can bring maximum out of a decentralised ecosystem. As stated by Sensorium, a metaverse and Web3.0 developer, blockchain interoperability will be needed to ensure widespread data sharing and digital asset-backed transactions. “The future of blockchain interoperability looks promising, as it has potential to create a decentralised ecosystem. The advancements in interoperability should foster a blockchain landscape, unlocking new levels of productivity,” Rajagopal Menon, vice-president, WazirX, a cryptocurrency exchange, concluded.

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