The Future of Blockchain Depends on Networks That Enable Interoperability
As of 2021, there are more than 10,000 types of cryptocurrency, and the ecosystem is still growing. This growth is in part due to improvements in the technology cryptocurrency is built on, blockchain, including expanded capabilities, increased popularity in the marketplace, and inherent security. However, with a massive ecosystem that’s still expanding, businesses worry about how these technologies can work together.
For blockchain to be a viable business tool, companies need to be sure that blockchain-based tools will work for their partners and customers. That’s why the next step in blockchain development is connecting the dots and ensuring interoperability between different types of blockchain. By simplifying blockchain connections, users can avoid complicated conversions — making it a more viable mainstream tool.
Clearing the Way to Connect Blockchain Technology
Two of the big challenges with blockchain are scalability and interoperability. Blockchain requires robust compute infrastructure to run properly, and businesses may find it a challenge to plan out how they’ll scale IT resources. Additionally, the blockchain ecosystem is a jungle of disconnected technologies, and it’s hard for businesses to visualize how they could use two separate blockchain technologies, let alone several.
Companies like Polkadot are changing this by creating an environment where users can connect different data and blockchain types in a single network, making the type of blockchain people and organizations use irrelevant. This blockchain-agnostic approach facilitates tasks like accepting payments, exchanging data, and managing supply chains with blockchain technology.
Typically, different blockchain technologies operate in siloes, making the transfer of data, currency, and other digital goods difficult. Polkadot is a multi-chain application environment where cross-chain registries and cross-chain computation are possible. In simple terms, it’s a network that connects different blockchain technologies so that they can communicate with each other.
How Does the Technology Behind Polkadot Work?
Polkadot unites a network of diverse blockchains called parachains and parathreads. The parachains maintain a persistent connection to the network, whereas the parathreads only connect on an as-needed basis. Additionally, Polkadot uses bridges to allow parachains and parathreads to connect to external networks, like Ethereum and Bitcoin. When parachains, parathreads, and bridges work together, it’s possible for different technologies to interconnect without forcing users to make complicated blockchain conversions.
Another feature that makes Polkadot stand out from similar technologies is its ability to perform multi-parallelized transactions. This means that transactions don’t have to perform actions in sequential order but can perform multiple actions simultaneously, drastically increasing transaction processing capacity. Multi-parallelized transactions deliver undeniable performance improvements and are something we’re seeing with popular blockchain technologies like Ethereum 2.0.
What Could Technologies Like Polkadot Enable?
The technology behind Polkadot creates a network of interconnected blockchains that make it possible to unify blockchain technologies. This would allow users to combine disparate technologies like cryptocurrency portfolios, smart contract chains, and file storage chains. Users would then have the advantage of a decentralized system with the interoperability benefits of working in a single ecosystem. But, this is only scratching the surface.
With a connected blockchain network, users get the best of both worlds — the security and trust of a decentralized system and interoperability that makes exchanging information on blockchains easier than ever.
Implementing Blockchain Is Within Your Reach
Blockchain technology is maturing, and adopting it in your business now will better position you for the future. Implementing blockchain in your business isn’t out of reach for many businesses, but it does require investment and commitment from your team. For that reason, it’s important to properly assess your business’s use case.
Do you have a current need that can be solved with blockchain technology? For example, in financial sectors, smart contracts help speed up loan approval while making the process more secure. In industries with long supply chains, blockchain offers a way to track materials at each stage of the chain. Start by identifying your blockchain use case and the potential ROI. If you don’t currently have a use, it may be best to set blockchain aside until a new opportunity arises.
Those who adopt blockchain early are more likely to secure a competitive advantage as these technologies gain public appeal. Coherent can help you assess your business case for blockchain and advise on the first steps for getting started, including which technologies will best suit your needs. Talk to one of our experts to learn more about how blockchain can revolutionize your business.