I recently penned an article titled “Unlocking the Potential of Blockchain and The Hurdles of Interoperability Across Networks” and I wanted to expand on that thought in an article by article fashion, this avoids writing a book on the topic. Over the course of the past decade there have been many viable blockchain networks developed, all that serve their own purpose, with of course the most widely known being Bitcoin.
Blockchain technology has revolutionized various industries from financial services and cross-border payment solutions to supply chain management. Blockchain has been integrated into existing and newly created systems offering them secure and decentralized solutions. However as I mentioned each viable blockchain network has it’s own vision at inception and it’s own purpose.
So with that said achieving interoperability among different blockchain networks so there can broader communication and utility has been a significant challenge. With private blockchain creation being implemented by major financial institutions, the interoperability factor is becoming more important every day. They have done this because of what blockchain technology can do, it can improve efficiency, security and transparency thus reducing fraud and costs. These are a few banks that took a deep dive into blockchain and this is only the beginning stages of where things will go:
- Bank of America launched a private blockchain network called Corda, which is used to facilitate trade finance transactions.
- JPMorgan Chase launched a private blockchain network called Quorum, which is used to track payments and settlements. Yes the same JPMorgan Chase who’s acclaimed CEO Jamie Dimon mocked Bitcoin, calling it a pet rock, is in the game.
- Citibank launched a private blockchain network called CitiFX Pulse, which is used to track foreign exchange transactions.
- Standard Chartered launched a private blockchain network called Contour, which is used to track trade finance transactions.
- HSBC launched a private blockchain network called Voltron, which is used to track trade finance transactions.
See the trend here, all of these financial institutions have developed their own private blockchains to improve efficiencies and reduce errors. Do you think that Bank of America’s Corda can communicate with JPMorgan Chase’s Quorum or Citibank’s CitiFX if they needed to? The answer is plainly no, unless they have the exact same coding structure which is highly unlikely. But just imagine if they could, that would streamline everything in the financial world, reducing wait times and increasing efficiencies and how about reduction of unnecessary customer fees, that would be a novel idea.
There are existing methods around today such as bridges and sidechains which are supposed to solve the interoperability issue but time and time again we hear about hacks of these bridges and sidechains costing investors hundreds of millions of dollars, so tell me how secure can they be if they are hackable? In the world of blockchain the actual blockchain itself if not hackable so the goal should be for the interoperability protocols to follow suit. Major financial institutions would not jump into the pool of bridges knowing what exist today, they would need a truly viable solution that they can literally bank on.
MegaHoot Technologies has understood this for some time and with strategic partnerships there are real solutions that will be entering the market, solutions that will bring forward a more secure and simplified approach that will be poised to transform the landscape of blockchain interoperability.
The introduction of a secure and proven bridge to achieve interoperability between different blockchains would be a gamechanger, this is beyond Web3, it has to do with secure connectivity in general. Such a bridge would not be limited to blockchains, it could span beyond that as long as it is an unbreakable protocol.
Existing bridges have been instrumental in enabling cross-chain transactions, enhancing liquidity and accessibility for users. However, despite their effectiveness, bridges as I mentioned come with their own set of challenges, the baggage they carry is like a ton of bricks which include potential security vulnerabilities and complex implementation processes.
Another method employed to achieve interoperability is through the utilization of sidechains. Sidechains are separate blockchains that are connected to a main blockchain, allowing for scalability, improved performance, and the ability to experiment with new technologies without impacting the main blockchain. So in short it offloads certain processes to sidechains, the burden on the main blockchain is reduced, which should result in enhanced transaction throughput and efficiency. However, sidechains have their own baggage of bricks to carry such as the need for consensus mechanisms between the main chain and sidechains and the potential for reduced decentralization. Reduced decentralization leads to security issues, adhering to true decentralization will lead to slow downs of systems, I mean really slow, this isn’t an option either.
There is no question that existing bridges and sidechains have made significant contributions to blockchain interoperability but in one way or another something was sacrificed, either security, speed or stability. There is a need for more secure and simplified systems that can be adopted on a mass scale, key phrase “MASS SCALE.”
MegaHoot is one of the companies that is in the midst of bringing forward proprietary systems that will allow various layer-1 blockchain networks to interact with each other in a highly secure manner. These upcoming solutions promise to simplify the complex task of achieving interoperability, making it more accessible and user-friendly for individuals and businesses alike. Whether they are private blockchains seeking to connect to public blockchains, this can be achieved in a very secure way. Just imagine the total upgrading of the SWIFT system, yes SWIFT is a well-established and trusted system that is used by banks and financial institutions all over the world, its backed and supported by them. However the cost and speed associated with it is archaic, just imagine sending a wire and it getting to it’s recipient in minutes anywhere in the world and not hours or days, it would be something else.
Now take that same scenario and allow banks and other financial institutions to communicate, share documents and information in a way they have never been able to, also in seconds or minutes, securely. The interoperability factor can and will allow these things to come to pass, it is a matter of having a proven protocol that can achieve it. MegaHoot Technologies is not only looking to bring this to market but do it in a way that it is proven , effective, secure and can solve a much bigger issue in the world of blockchain technology.
I will be adding on to this article with other articles on the topic as MegaHoot makes progress, this is an excited time we live in and just as when the light bulb, television and internet were introduced, these progressions are sure to not only change the blockchain technology landscape but create a foundation for future innovation. This is one step on a great long term journey of innovation.
Managing Partner – FGA Partners