Interoperability and Its Role in the adoption of Blockchain Technology

Blockchain technology (which enables the use of cryptocurrencies, NFTs, and more) is a distributed ledger technology that allows users to record and keep track of transactions within the network.

Blockchain technology enables users to track any held assets, create new assets, and spend blockchain-based tokens.

Blockchain's distributed nature means no one entity is required to manage the network's operations. Instead, the blockchain is secured by a network of nodes or miners who validate and process transactions.

While blockchains have many capabilities, being able to communicate with each other is not one of them.

Currently, most blockchains work individually, and connecting them will help improve the technology's usability.

In addition, interoperability can improve the adoption of blockchain technology by enabling a blockchain to exchange data with other blockchains.

As a result, digital assets on one blockchain may be transferred to another, making it easier to use decentralized applications across multiple chains.

Every blockchain is a separate entity, so naturally, they can't interact with each other. For example, let's look at Ethereum and Tron's cases.

Given that they are both different, they can only interact with each other with an interoperability solution. 

If blockchains could work together, it would be much easier to interact with each other and exchange information. This could make the blockchain industry a much more efficient and much more competitive one.

It would also help people using blockchain-based platforms because it would be easier for them to access many platforms.

Since every blockchain has its native dapps (i.e., lending protocols, DEXs, etc.), users will likely switch between different networks to use these platforms.

Blockchain interoperability aims to enable the seamless transfer of assets between these networks. Developers can achieve one of the ways interoperability by creating versions of the same asset on multiple networks.

Next, a bridging solution can connect both chains, locking and releasing assets when needed.

Since interoperability solutions work via smart contracts, the process stays decentralized.

Therefore, developers must facilitate the connectivity of blockchains to acquire information from one another while maintaining decentralization.

Therefore, having connected blockchain ecosystems is preferable to having them apart. 

The potential for blockchain technology to succeed can be boosted by enabling various blockchain networks to interact and share information. 

However, this is difficult owing to the inability to exchange data between multiple blockchains.

For instance, users cannot transfer assets from the Ethereum blockchain to the Binance Smart Chain without using a cross-chain bridge.

Bridges and other interoperability solutions enable users to transfer assets across multiple blockchains. One popular example is the stablecoin Tether (USDT) on Ethereum, TRON, and other blockchain networks.

Bridges work by having the asset on both blockchains. So, for example, let's say a user wants to send USDT from the Ethereum blockchain to TRON.

The ERC-20 token will be locked into the bridge, and an equal amount of the TRC-20 token will be released.

It looks something like this:

A user sends 150 USDT (ERC-20) to the TRON bridge.150 USDT (ERC-20) is locked into the bridge150 USDT (TRC-20) is released by the bridge to be used on TRON

Bridges work via smart contracts that automatically execute once the required conditions are met. So, users can move assets between blockchains without needing a centralized intermediary.

Connectivity between blockchains will make it simple for anyone to interact with protocols and decentralized applications (dapps) since they won't have to buy each network's native token.

Instead, they can use one token or asset across multiple networks via bridges.

One way users can achieve blockchain interoperability is by developing a sidechain. Sidechains are independent blockchains that work alongside the main chain and are usually connected via a bridge.

The purpose of a sidechain is to process transactions for the main blockchain, which reduces the strain on the main chain. 

For example, the Ethereum blockchain used to suffer from congestion when too many transactions needed processing. When the network is congested, transaction times are slower, and fees are more expensive. 

The main blockchain can benefit greatly from having its transactions moved onto sidechains. This allows the main chain to deal with fewer transactions, preventing network congestion.

Interoperability also includes transferring tokens from one blockchain to another via token swaps.

Through atomic swaps, sometimes referred to as cross-chain swaps, it is possible to transfer tokens from one blockchain for tokens of a different blockchain without the involvement of a centralized authority.

The functionality of cross-chain swaps is dependent on smart contracts that can manage many types of tokens.

A transaction involving the exchange of tokens will be carried out automatically by smart contracts upon fulfilling certain conditions.

Users cannot implement atomic swaps on some blockchains without first establishing cross-chain bridges. Using these bridges makes it possible for users to transfer assets across separate blockchains.

Interoperability can help to increase the adoption of blockchain technology by simplifying the user experience for those who want to engage with protocols across multiple networks.

In addition, interoperability could give rise to more niche blockchains since users won't be locked into a single network when transacting.