The significance of blockchain has been extensively discussed in the literature. Although it is a straightforward idea, it has been easier to implement in reality. But if blockchain is ever going to reach its full potential, it must be put into practice.
Networks have multiplied due to blockchain’s open and decentralised nature. CTE probably has more than 100 operational blockchains, all connected to one another and without means of communication.
It is difficult for a user on the Ethereum network to connect with a user on the Bitcoin blockchain and vice versa since both networks cannot communicate with one another.
Hugo Philion, co-founder and CEO of Flare Network, discussed the issues this lack of compatibility poses and how it prevents widespread adoption in an interview with Bitcoin.com News.
Although Defi has grown to be the most prevalent blockchain use case today, he noted that the absence of connectivity across networks dramatically hinders it. “The size, participation, and efficiency of the Defi market have been hampered by the lack of effective cross-chain communication,” Philion claimed.
In addition to costing billions of dollars, present designs are also challenging to use, which only allows more experienced users to participate. Market size, liquidity, and returns have all been restricted.
Decentralised finance has a major challenge since the number of use cases drastically decreases when customers cannot trade Bitcoin for Ethereum without using a centralised exchange provider. And because there are so few, limited uses, adoption is still at a standstill.
“Additionally, application cases using communication that may drive adoption have remained undiscovered,” Philion continued. He added that purchasing assets on a network of smart contracts while paying with bitcoin may be a straightforward use case.
He thinks it may change software used for digital tickets, gambling, payment gateways, and other things if it were possible.
The lack of compatibility in blockchain technology, according to Philion, is really intentional. Blockchains were developed as distributed ledgers with the sole purpose of processing native transactions.
With decentralised analogues to the chains themselves, how can data regarding several chains be appropriately acquired and verified? How can this be accomplished while considering chain rollback risk, too?
There have previously been many attempts to solve this issue, but most of them have failed terribly. Existing blockchain bridges have become one of the main targets in the cryptocurrency ecosystem, as Philion notes, with hackers exploring them for flaws and frequently finding them.
New cross-chain bridge protocols were the subject of multiple trials in 2021 and 2022, and the outcomes were nothing short of catastrophic for thousands of users.
In the end, Philion said, “many underperformed abysmally with more than $2 billion of assets misused in the previous 12 months.”
The failure of these trials demonstrates that the market has not yet produced a sufficiently safe method to acquire and confirm the state between two different blockchains, according to Philion. And the absence of a solid answer is seriously impeding advancement in the cryptocurrency industry.