Multichain solutions will transform the blockchain space, making it more than an "interesting new tech" but an industry that is essential and high-growth.
Some estimates put the market for blockchain at more than $21 Billion by 2025. The total market capitalization for the cryptocurrency market is already over $1.9 trillion. A community
that once was defined by its close-knit community, exclusivity, and tightness now has a wider reach. This ecosystem is being embraced by governments, institutions investors, and individuals who are becoming more positive about this evolving space.
This new popularity has created a crossroads. The point at which the number of people using decentralized technology exceeds its functionality is here. This has led to a need for solutions and regularly congested networks.
Many of the problems we are facing could be easily solved by scaling solutions like bridges, parachains, and other features that allow seamless transitions for Web 3.0 users. These solutions rely solely on a common vision of a multichain approach toward the next wave in blockchain adoption.
The Ethereum Scalability Challenge
Nearly all Defi projects today are built on the Ethereum blockchain. This makes it the default blockchain for many decentralized apps (DApps), and protocols. Scalability on Ethereum is not without its challenges. Many issues delayed adoption, including high gas costs, a complex onboarding process, unnecessary repetitions, and a difficult onboarding process.
There has been a rapid emergence of blockchains like Solana, Cosmos, and Binance Smart Chain. These solutions are rapidly catching up to solve some of the problems associated with the Ethereum building. These solutions are not intended to "kill Ethereum", contrary to popular belief. They are meant to offer a multichain approach to building Web 3.0. Developers are trying to make the most of the technology's potential, and the number of blockchains is increasing each day. This is a tacit acknowledgment that there will never be a perfect solution to all blockchain problems.
Multichain is not about competing. Instead of being competitive, we can facilitate and interconnect a new chain to improve the user experience. Multichain ecosystems would enable anyone to create anywhere. It relies on cross-chain solutions. Some of these are in production. The ecosystem is also dependent on compatibility solutions for Ethereum Virtual Machines. These solutions enable different blockchains to communicate directly with each other without intermediaries, much like the internet does today.
Learn from the Evolution and Growth of the Internet
Blockchain technology, like the internet before it, was once disjointed and faced scaling problems. It must change from its current state, where chains operate in isolation, to a connected ecosystem. This will allow novice and new users to reap the benefits of blockchain technology. It is our goal to make digital ledger technology available for commercial use.
DApps today are complex and costly, much like the World Wide Web. Instead of the fluid experience, one might experience when using apps like YouTube and Instagram, the blockchain experience is defined by each part and experienced by that individual. This causes fragmentation in actions that should be seamless. Multichain technologies will transform that experience from complex chain-to-chain moves to uninterrupted activities in the end user's ignorance of which chain they are on.
We are only able to imagine the future, but it is possible that blockchain technology could change the way we work. Consider the implementation of blockchain technology in the traditional financial sector. Interoperability is a problem that would make it difficult for banks to interact with each other using different blockchains. This would cut off communication between customers who have different blockchains. Transmitting data between the blockchains would not only be possible but also safer and more efficient.
The future of web 3.0 will be the ultimate connector for on-chain communication. Web 3.0 will make it easier to transact on the web, more inclusive, and more semantic, just as Web 2.0 made the internet interactive.
A Multichain Future
To make blockchain a high-growth industry, it is crucial to take control of existing blockchain complexities.
Think of major layer-one blockchains such as Ethereum as a city. Although they are more congested and expensive, you still get some benefits. Layer two and sidechains, on the other hand, are closer to the suburbs. They may be less congested, but they offer lower security. Users could have the best of both worlds if there was a reliable means of rapid transportation between these communities.
We must prepare for Web 3.0's mass adoption. This will allow us to eliminate complex transactions and provide an easy experience for users.
Multichain Solutions
Today, cryptocurrency has grown beyond Bitcoin and Ethereum. Successful initiatives like Polka Dot and Solana are developing multichain technologies that will change how users interact with many protocols. Few projects can deliver on their promises of scalability, despite claims that they are "Ethereum killers" and "the new Bitcoin." What if we gave up evaluating projects side by side and instead concentrated on multichain solutions encouraging cooperation over the competition? Ultimately, this will boost user interaction and help the entire crypto ecosystem.
Let me illustrate how the global community has benefited from cooperation in the current financial system. Sending money to a different country is now possible because of various international bank alliances. Consider how annoying and challenging it would be for banks not to provide wire solutions or third-party platforms for money transfers. Customers may become dissatisfied or commercial prospects may be lost as a result.
Cryptography is an example of a similar concept. Many crypto enthusiasts find it difficult to navigate specific projects because of fees, delays, and a lack of technical expertise. Multichain networks will allow cross-chain interaction as they connect multiple crypto projects to one platform. This will enable us to send money easily and interact with smart contracts. It will also facilitate better user experiences.
Cryptocurrency's UX can be problematic. Beginners may find platforms confusing and challenging to use, especially when transferring money between blockchains that are not interoperable. Consider the scenario where I have an ETH-based Metamask wallet and want to transmit money to a friend who only has a Bitcoin wallet. Without a bridge, both projects will not work together. As a newbie to crypto, it is possible that I don't know much about bridges. The easiest way to solve this problem would be to sell Ethereum and buy Bitcoin, then send it to my friend. This is inefficient and expensive.
Moving from Layer 1 - To layer 0
It was amazing to hear the Polka Dot team at their conference talk about creating Layer 0s. First, let's define what Layer 0 is. Main Blockchains can be referred to as Layer 1. To address an issue or enhance the user experience, Layer 2 software is referred to as living inside Layer 1 Blockchains. The network's gas fee problem is resolved using Polygon, a Layer 2 scaling solution for Ethereum.
The foundation of Layer 0 is that it is highly challenging for one project to carry out all the necessary tasks. We may concentrate on integrated bridges that connect several projects instead of just one Blockchain. According to Layer 0's, blockchains can easily link to other protocols and share the same protocol with them. They will be able to develop, link value chains, and provide cutting-edge smart contracts. Using Layer 0s, a single, integrated Blockchain will be created by connecting protocols, hardware, and validators.
Multichain Leads to Better Security
The Polka Dot team provided interesting insights on the enhanced security capabilities of Layer 0's. Blockchains that begin from zero often have problems with security. This is because they are a new protocol and need to be tested.
It is often easier to create new projects using existing protocols like Ethereum because developers can use security guidelines and check vulnerabilities before launching the project.
Layer 0's like Polka Dot allow Blockchains to share security data and automatically gain access to validator nodes within the network. This is in place of having to hire their validators. If there is a shortage of validators, it can take a long time to build a new team. This can make networks less secure. Cyber-attacks are more likely to occur in protocols that have more validator nodes.
Valid Data for Multichain Networks
Multichain is still a new concept and needs much more development. When it becomes a reality, it will offer strong access to various protocols and vast sums of tokens. With the development of multichain technology inside the crypto ecosystem, security and data monitoring will become increasingly crucial.
In the future, real-time data and ongoing monitoring of multichain networks will be necessary to aid investors and actors in making decisions, seeing suspicious behavior, and identifying vulnerabilities before they are taken advantage of. Valid Data, our platform for crypto data insights, may be used in any blockchain or protocol, regardless of the layer. To deliver real-time and forecast information on security and dependability, Valid Data keeps an eye on thousands of digital assets and dozens of blockchains. As multichain develops, Valid Data will continue to be the security standard for cross-chains in the crypto sphere.
Is Multichain the Future of Blockchain Technology?
Blockchain technology was introduced in 2009. It has been a major contributor to the development and improvement of the Internet. The success of the technology in achieving widespread adoption will depend on how many blockchains interact with one another. One of the most important steps in creating a decentralized world should be the interoperability of blockchains, which enables connections to be created without using middlemen.
Top 3 Blockchain limitations
Despite all the advancements in blockchain technology in the last decade, it is still in its infancy. Blockchain is often compared to the early days of the Internet at this stage. Let's look at some of the critical flaws in blockchain technology that hinder global adoption and expansion.
- Cost
It is expensive to create and implement blockchains that have advanced functions, such as Ethereum. As observed on the website cryptoFees.info, an increase in transactions impacts the network's speed and cost. It has been established that Ethereum's transaction fees are much higher than those of other blockchains.
- Scalability
The potential for international companies with millions of clients all over the globe to use blockchain technologies. Many blockchain solutions are still developing and difficult to scale to serve global finance, healthcare, or logistics markets.
- Interoperability.
Until recently, each Blockchain was built as an independent, separate ecosystem. The growing popularity of decentralized finance has made the issue of blockchain interoperability more important than ever. Companies have repeatedly emphasized the need to bring together large blockchain platforms that were previously created independently. Blockchain bridges were created to solve the problem of blockchain interoperability.
Is Blockchain Bridges a good Solution for Interoperability?
Cross-chain bridges or Blockchain connect two blockchain networks, allowing dApps to take advantage of both.
Let's look at the benefits of bridges:
- Flexibility. Bridges let you transfer data and assets from one Blockchain to the next.
- ScalabilityBy linking two blockchains, this bridge distributes transaction load across its ecosystem.
- Fast transaction speed. The speed of data transfer and payment processing across the two blockchains can be nearly instantaneous thanks in large part to cross-chain solutions.
- Efficiency. With cross-chains, users may transfer their assets to scalable Blockchains that benefit from reduced gas costs and take advantage of Ethereum smart contracts.
Read More:- The Impact of Blockchain on Business Operations
Cross-chains may not be perfect, despite some solutions to blockchain interoperability problems. The following should be considered:
- Costs. Each pair of blockchains requires a cross-chain bridge to be built. This is both costly for developers as well as inconvenient for users.
- NFT ownership and transfer. It is unclear how cross-chain bridges verify the authenticity of NFTs transacted across multiple blockchains. How are transactions and owners tracked if an NFT(nonfungible tokens) is sold and bought on different blockchains?
- Network overload resistance. It is hard to predict how blockchain bridges will behave in congested chains, given that they are a new technology.
- Hacker attacks. If not sufficiently tested, cross-chain bridges are susceptible to hackers. Defi projects lost $4 million to hackers in July due to a ChainSwap vulnerability. TronChain has been hacked twice, causing roughly $13 million in losses. A hacker broke into the Poly Network Internet Protocol in August 2021. He stole several cryptocurrencies worth $611 million.
Summary: Bridges provide interoperability that was previously unattainable. The Aurora project, for instance, enables developers to switch Ethereum Dapps to NEAR, which is more economical and enables cryptocurrency users to trade assets for a fraction of the cost they would pay if they were using Ethereum.
However, as we have seen, some limitations can still be bridged, leading us to whole multichain blockchain ecosystems.
Top 3 Blockchains that Implement a Multichain Approach
Over the past few years, multichain has been a successful development. These solutions aim to improve scalability. This allows for faster transaction speeds, network throughput, and lower fees. These protocols allow for easier development and operation of dApps while ensuring privacy and interoperability with other Blockchains.
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Cosmos
The Cosmos ecosystem is constantly growing and is called "The Internet of Blockchains". Thanks to Cosmos Hubs, blockchains may communicate with one another utilizing the Inter-Blockchain Communication protocol. On the Cosmos Network, 259 decentralized applications have been introduced thus far. The capitalization of all assets exceeds $161 million.
Cross-chain solutions are the primary characteristic of the Cosmos Hub Blockchain. This enables all blockchains inside the Cosmos ecosystem to communicate internally and externally.
Thanks to the Inter-Blockchain Communication Protocol, any blockchain can send data to another one. Cosmos uses the Proof-of-Stake algorithm. With Proof-of-Work Blockchains like Bitcoin, this is incompatible. However, the usage of peg zones has provided a solution to this issue. Cosmos wants to work with every Blockchain.
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Polkadot
A multichain solution called Polkadot uses its parachains to quickly and securely transfer data between other blockchains. Because it doesn't require any forks to adapt and update itself, Polkadot was created to be resilient.
Polkadot is a network that connects public and private blockchains. Independent blockchains can exchange information and transaction data thanks to Polkadot. It combines the digital world, the Internet of Things, and network decentralization, making it a project of the future.
Polkadot enables the consolidation of blockchain technology, which unites distinct chains into a single scalable network. This permits practical applications, the development of new infrastructure, and the balance of upcoming decentralized economies.
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Polygon Network
The platform Polygon developers have developed enables Ethereum to communicate with other blockchains. Thanks to Polygon Network sidechains, users can use the Ethereum blockchain to conduct quick and inexpensive transactions. This offers scalability and lessens congestion.
The core of the entire Polygon ecosystem is the Polygon SDK. It is a flexible framework that enables programmers to build distributed applications. It will be simpler for developers to install their blockchains on Polygon. With Ethereum, Polygon is instantly compatible.
The Plasma Chains scaling paradigm and an Ethereum Matic PoS sidechain, both based on Proof of Stake, were both developed by the Polygon team. Additionally, it can deploy smart contracts freely from Ethereum projects to this Blockchain thanks to compatibility with the Ethereum virtual machine (EVM).
Like Cosmos and Polkadot, Polygon aims to close the blockchain divide. It enables them to work as a network of connected nodes that facilitates communication between numerous decentralized goods and services.
Blockchain is the future of Web 3.0: Why Blockchain is so important.
Web 3.0 promises to regain control over the centralized corporations currently dominating the Internet. Thanks to decentralized blockchains like Ethereum and Bitcoin, which aren't governed by any entity and provide a nearly 100% guarantee of data authenticity, it is continually changing.
The advantage of Web 3.0 is that it aims to address Web 2.0's biggest flaw. This is the gathering of private networks' data. These details may be taken by hackers or sold to advertising.
Because Web 3.0 is a decentralized network, nobody can command it. Anyone has access to the dApps that have been developed on the network. This implies that only one party can control or access data. Anyone can create and link numerous applications without the consent of a central organization.
In reality, the development of Web 3.0 included the cooperation of numerous individuals and groups engaged in smart contracts, mining, and validating blockchain transactions on platforms like Ethereum. The pioneer of Web 3.0 is acknowledged to be Ethereum.
The most popular and commonly used Blockchain for creating smart contracts is Ethereum. A few issues have, however, stopped it from becoming widely used. Defi development is more concerned with collaboration and connection than earlier developers attempting to become the next Ethereum rival. This is how blockchain technology will develop.
During the blockchain development stage, you can use the technology in various company areas, including management, finance, and insurance. Every issue you have with development can be resolved using INC4. To request a free consultation, just complete our simple form.
