Polkadot & Cosmos Are Bridging the Gaps in Crypto-Verse

According to CoinMarketCap, more than 11,500 cryptocurrencies are currently in circulation as of September 10, 2018. Many of these cryptocurrencies will be built on the Ethereum blockchain.

The current version of the system allows the value on these networks to only flow to other people via exchanges. Although this is fine in theory, exchanges have become extremely powerful because they act as intermediaries for wealth moving through the crypto ecosystem. This could change soon!

Many projects are building cross-chain bridges. These digital pathways allow data, money, and dapps seamlessly to move from one blockchain to the next.

Developers and communities will not be restricted by the location and type of code they use, creating a network of blockchains that has few or no barriers.

What are cross-chain Bridges?

All of the most well-known blockchains are similar to Eden’s garden. Data users have difficulty changing places because they protect assets. For example, Ethereum and Bitcoin are the market leaders. While all input data is visible to everyone, the data remains locked on the blockchain. This is done to protect the ledger that contains records of all transactions on the blockchain.

Blockchain bridges allow blockchains to mix and mingle. Bridges can be used to connect two blockchains or the same side chain. This is essentially a way for blockchains to mix and match under different rules.

Interoperability allows for the transfer of tokens and data between different platforms. This is an essential feature for blockchains as it allows projects to move digital assets from one blockchain to another. In addition, this allows projects to run dapps on multiple platforms and perform fast, low-cost token transactions on other chains.

How Cross-chains Will Bridge The Crypto-verse?

While there are many ways to accomplish this, the majority of them are decentralized or centralized.

These centralized versions manage the minting and locking of new assets. Wrapped Bitcoin is a famous example. wBTC is a way for Bitcoin holders to gain access to the Ethereum ecosystem through a token swap.

This system allows users to deposit Bitcoin into wallets controlled by BitGo, an institutional digital asset company. The BTC is stored, and the tokens wBTC are created on the Ethereum blockchain.

wBTC tokens are then available for use in ethereum dapps like Uniswap or Compound. Unfortunately, Bitcoin cannot be used on its own in this manner.

Things work a little differently when it comes to decentralized versions. Assets that are looking to change chains will often be locked on the blockchain.

The new blockchain creates equal amounts of tokens and deposits them into the user’s wallet. The tokens can be burned if the user wishes to transfer their assets in the opposite direction.

Which Cross-chain Bridge Will Connect The Crypto-verse?

Polkadot, one of the most famous cross-chain bridge projects, is also the largest. Its mission is to create a “blockchain of Blockchains”, allowing sovereign blockchains (or what Polkadot refers to as ‘parachains”) to be interoperable with other projects via Polkadot’s Relay Chain. In this case, Bitcoin and Ethereum could be connected via Polkadot.

Cosmos is another project that aims to facilitate more data transfer between networks. It has already built several bridges, including the DeFi Cosmos Ethereum Bridge, allowing digital asset holders to make DeFi.

Another project, the NEAR Protocol, is aimed at helping Ethereum developers to create cheaper and faster ways to run applications using a bridge. Rainbow is the version that allows projects to conduct transactions on NEAR and still be present on Ethereum.

Although this technology is still in its infancy, it will help create an ecosystem that is more similar to the internet. For example, many networks could move data about a network in the early years. These included NPL, ARPANET Merit, and CYCLADES. However, networks could communicate with each other only after a single version, called the Internet Protocol, was created. Let’s all hope that blockchain will reach this point sooner than we think.

As a leading blockchain development company, Monkhub also offers Polkadot development services and makes sure they use a cross-chain network to accomplish high transaction output with no failure.  To learn more about our Polkadot application development experience, which includes data across global, private, open, and permissionless blockchain networks, contact us now.

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