What is Blockchain Interoperability? A Beginner’s Guide

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Blockchains are decentralized network infrastructures that keep a record of users’ accounting records and other pertinent information in a decentralized database, which is transparent and visible to the general public. Blockchains are used in cryptocurrencies like Bitcoins or Ethereum as these assets are primarily built upon these decentralized ledgers.

Such blockchains employ decentralized consensus mechanisms rather than depending on a centralized government to reach an agreement on recommended alterations to the log before any such modifications are implemented. This ensures that power and authority aren’t limited to a few dominating individuals that may use the ledger to their advantage only.

The end consequence of such technology is an entirely new, revolutionary, and trust-minimized innovation for the sole purpose of multi-party maintenance of data, which is definitely more tamperproof, authentically unbiased, and open than conventional computer contexts.

On the other hand, blockchains are analogous to workstations that do not have access to the internet. They are not equipped with built-in connections with some other blockchain technology or perhaps with APIs that are accessible from the outside.

This constraint, which is often known as the oracle issue, not merely inhibits conventional technologies from communicating using blockchain technologies but also stops interoperability across blockchain technology technologies from happening.

Interoperability mechanisms for blockchains are increasingly important as the concept of many blockchains becomes more widespread. But what is interoperability, and how is it connected to the blockchain?

This guide article provides a foundational understanding of blockchain interoperability by defining the term and discussing its significance. It also describes the various blockchain interoperability alternatives now available and explains how the Cross-Chain Interoperability Protocol operates.

Lastly, this guide will also highlight the advantages and disadvantages associated with blockchain interoperability, so keep reading.

What is Blockchain Interoperability?

Nowadays, blockchains are acknowledged as foreseeably game-changing technologies across a wide range of areas, including medical studies, and network monitoring, besides their function as the underpinning technology for Bitcoin and other cryptocurrencies. The tremendous enthusiasm for the innovation behind blockchains has generated a variety of different studies and developments.

Because of this, the blockchain sector is quite fragmented, which implies that clients have the option of selecting from an assortment of technologies that are irreconcilable with one another.

However, since interoperability across multiple blockchain technologies is not normally foreseen in preexisting systems and methods, features like token transmission and smart contract execution are now only possible inside a singular blockchain.

Speaking of interoperability, it is basically the capability of one blockchain to effortlessly transfer information to other blockchains and even receive information from them. For example, a ledger typically keeps a record of every transaction that takes place on it, alongside acting as a log for every commodity associated with it.

Any kind of monetary transactions that occur on one blockchain may be replicated on some other blockchain if appropriate interoperability technology is implemented. Therefore, one of the most appealing aspects of interoperable blockchain systems is the possibility of economic transactions on one network spilling over into some other.

Indeed, the determining factor in the effectiveness of blockchain technology is going to be the level of interaction and integration that may occur across the many blockchain platforms. Because of this, the notion of interoperability across blockchains is the means through which various blockchains connect with each other in order to facilitate the efficient exchange of content.

In its most basic form, interoperability refers to the capacity to comprehend and receive content across several blockchain-based organizations. If someone were to transfer information to some other blockchain, for instance, the receiver should be capable of comprehending it, understanding it, and responding to it with very minimal effort. That is exactly what interoperability is!

Among the initial breakthroughs in the area of cryptocurrency interoperability was the idea of a trustless bitcoin exchange framework that doesn’t really involve a middleman. Primarily, interoperability was achieved via the employment of atomic swaps, also known as atomic cross-chain exchanges.

Atomic swaps allow consumers of different cryptocurrencies to trade their possessions in a fashion that is both permissionless and atomic in nature. Nevertheless, despite being trustless, atomic swaps didn’t allow the transfer of tokens between different blockchains.

This is due to the fact that during an atomic swap, a predetermined quantity of securities on the reference blockchain is obliterated, and an identical quantity is (re)created on the location blockchain. Hence, it can be said that atomic swaps make it possible to exchange tokens across the bounds of a blockchain as opposed to simply transferring them.

Because of this, it can be deduced that atomic swaps will always necessitate another party provider, apart from the main blockchains in action that is prepared to exchange tokens if needed.

To this day, this is what has necessitated the presence of a trustworthy and centralized authority, which is in direct opposition to the decentralized character of blockchain technology.

As a consequence of this, cross-chain architecture is increasingly becoming the topic of discussion as the most effective method to increase interoperability across blockchains whilst trying to maintain the blockchain’s decentralized nature to the greatest degree possible.

Cross Chain innovation was developed with the goal of resolving all of these data exchange issues by improving the interoperability across different blockchains. The concept is progressively gaining traction among new initiatives as they work to make platforms capable of conducting “mutually beneficial two-way communication.”

The elimination of middlemen or external stakeholders, which are associated with traditional centralized systems, should indeed be made much easier by the interoperability of blockchains.

Therefore, the capacity of various decentralized channels to connect with each other directly and without the involvement of any middleman ought to be a significant factor in the development of completely decentralized organizations.

How Does the Interoperability of Blockchains Work?

The cross-chain technology makes it possible to share data across several blockchain platforms and simplifies the process of interoperability across different blockchain ecosystems, as we just learned. Through the utilization of the cross-chain protocol, individuals are able to immediately connect between themselves, no matter if they are practically operating on different blockchains.

As a consequence of this, blockchains with similar connections are able to trade both wealth and content with one another. Nevertheless, this differs from node-to-node data transfer since there is no particular preset technique that can be applied in a manner that is consistent across all systems. Every platform employs its own one-of-a-kind mechanism for achieving ledger scalability in order to conduct payments sans relying on gateways provided by other parties.

As was said before, atomic swaps make it possible for parties involved to trade their tokens throughout numerous blockchains. Besides being able to trade, owing it all to relays, organizations based on blockchain technology are likewise able to keep track of the actions taking place on other channels too.

Additionally, they function on a cross-chain foundation, making it possible for a centralized convention to function as a client for many networks sans requiring dispersed nodes. This means that the system is able to rapidly verify certain core headers in addition to keeping track of the complete transaction background. Nevertheless, running and sustaining the relaying approach’s reliability demands a considerable amount of money and effort.

Available Methods to Enable Interoperability Across Blockchains

Interoperability across different blockchains has indeed been suggested using a wide variety of different methods. Each method is designed to accommodate a distinct set of applications, also including token exchange as well as transmission, cross-chain information accessibility, or the initiation of smart contract functions.

In what follows three different strategies for putting interoperability across blockchains into practice will be discussed in the following paragraphs:

Atomic Exchanges

The buying and selling of tokens between two (or more) different parties are one of the most common and notable application instances for blockchain interoperability. In this case, each user stores personal tokens on a different blockchain, even though both users have connectivity to both blockchains in operation.

They implement a commit-reveal mechanism that allows the transaction to be carried out in an atomic manner once they have reached an agreement to trade those tokens at a predetermined exchange price that both parties have mutually agreed on.

As a result, the transaction may either be carried through or can be reversed. Here, there is no necessity for transmitting material across the blockchain networking site since all of the necessary content may be gathered simply by viewing the ledger containing the predecessor’s resources.

Chain Relays

The provision of global interoperability across blockchains sans requiring users to place faith in any intermediates is the primary purpose of chain relays. The hash chain of the parent network is implemented on the pinnacle of a targeted blockchain, often inside a smart contract, as opposed to depending on exterior auditors to do the deed.

Since operations do not need to be verified, there is a reduction in the expenses associated with memory, connectivity, and processing.

Customers are capable of proving the incorporation of events, variables, and occurrences by referencing the block headers that have been transmitted. Consumers of chain relays, as opposed to consumers of notary arrangements, should merely put their faith in the chain relay’s ability to perform its intended functions.

As a consequence of this, it is considered that they offer trustless data interchange between chains. Nevertheless, there is an expense associated with the certification and authorization of complete hash chains.

This is due to the fact that the consensual algorithm of the parent blockchain is often implemented for each and every preceding block of the parent chain, which results in expensive overhead and, therefore, higher administrative charges.

Notary Scheme

Notary systems provide a versatile exchange of information in contrast to atomic swaps, which can only be used for a specific purpose. In this scenario, third-party organizations use one blockchain to get content like payments, states, happenings, or communications devoted to being sent between chains. After that, they authenticate it and then post it onto another blockchain so that it may undergo additional verification.

Those notaries might take the form of a solitary reliable body or a collection of individuals working together. Notaries will often be required to post a particular quantity of collateral, which, in the event that unscrupulous actions are discovered, may result in the return of some or all of the deposited funds.

In some systems, the generation of confidence in the data that is transmitted is accomplished by relying on parties who are already considered reliable. The corresponding identities are then verified.

In predefined systems, the acceptance of relayed content is contingent on obtaining a predetermined minimum number of signatures required. Given that they do not rely on the specifics of the underlying blockchain’s deployment, notary schemes provide a great deal of adaptability.

In addition to this, they are likewise capable of offering accurate information, and the on-chain certification of identities is very inexpensive in comparison to the use of chain relays. These include a minimal amount of costs incurred in the process of generating and validating complicated proofs or intermediate data.

What are the Advantages and Disadvantages of Blockchain Interoperability?

Blockchain innovation can be used in almost every sector of the economy. It is challenging for businesses that operate in different sectors to connect with one another and exchange material when they’re using different blockchains. These businesses would want to be able to connect with one another, and that’s what interoperability would offer.

When supply chains are consolidated into a single, cohesive digital platform, businesses in different sectors are better able to share information, build upon each other’s successes, and create an environment of entrepreneurship where the flow of ideas and innovation is quicker and definitely more efficient.

Functioning inside such a linked virtual environment might, over the course of time, assist businesses in the creation of new goods and activities too.

Economists have traditionally lauded the benefits of a free market economy and with a good cause, though. It is challenging to argue against the fact that free trading makes it easier for people all over the globe to exchange products and activities with one another, regardless of the governmental and socioeconomic implications of free-market principles.

Because there are so many different blockchains, there is no such thing as free commerce in the cryptocurrency environment. You will not be able to transfer a financial instrument to a person whose cryptocurrency wallet uses a different chain when you are in possession of that commodity.

Interoperability across blockchains removes this impediment to commerce, allowing for increased liberty in the movement of electronic products from one part of the digital environment to another.

The Web 3.0 environment as a whole may be profoundly altered by the implementation of the cross-chain innovation too. The way things exist right now, the universe of cryptocurrencies is made up of several independent blockchains, each of which follows all its standards and protocols.

If individuals are able to successfully join these blockchains and get it over with, the connection that is produced as a consequence would connect individuals among all traditions and leanings and would provide them with an astounding variety of brand-new options.

Moreover, although decentralization has been situated at the core of Web 3.0’s philosophy for some time now, most applications of the idea have been made in the context of distinct blockchains. The decentralization aim might be expanded to include the whole cryptocurrency environment if cross-chain development is successful in the near future.

If information and valuables can be transferred across blockchains in a smooth manner, then users won’t congregate in large numbers and start monopolizing the sector, thereby controlling things over it.

Besides, consumers would have more options available to them if there was a linked system of narrower chains, which would also discourage any one chain from developing an undue degree of dominance and control.

Nevertheless, there are a couple of drawbacks associated with the interoperability of blockchains as well. In the first place, they have quite stringent limitations and restrictions imposed on them. Despite the fact that it may be difficult and confusing for consumers to understand these limitations and work around them, it guarantees the confidentiality of content transmission.

Second, because this field of employment remains comparatively unknown, it might be difficult to find eligible individuals to assist blockchain interoperability organizations with the procedures.

In addition, the reversal of the transmission of information on a cryptocurrency ledger is not permitted since a blockchain that has been established on a node cannot return to its starting point.


Interoperability between blockchains and cross-chain technologies are both fundamental and critical components of blockchain technology. These two ideas, together, not only extend the application of cryptocurrencies and widen it up but also hasten the spread of blockchain technology across different realms.

Cross-chain software possesses the opportunity to solve the sustainability problems which have plagued the blockchain industry for generations too. These problems have prevented the network from reaching its maximum capabilities. Therefore, achieving interoperability is a huge boon for blockchain.

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