Today there is no compatibility between various blockchains. To transfer the cost between blockchains, tokens are first moved to a crypto-exchange, exchanged, and a new token is transferred to another blockchain. It is expensive, rather slow, and at risk from the participation of intermediaries.
Currently there are two ways to combine different blockchains:
Send status messages from one chain to another. For this, artificial tokens will be needed (one-sided and double-sided bundles, side chains).
Perform cross-platform atomic exchanges (swaps). That is, users from different blockchains exchange tokens and at the same time, they do not need to trust intermediaries*.
The two most important projects in this space now are Polkadot and Cosmos. They each claim to be the "blockchain of blockchain". Both have internal tokens, which are used as payment for work performed to check the network.
The differences between these two networks are local vs. global validators, management & participation, in-between communication of chains, consensus algorithm, and development toolkit.
Each chain in the Cosmos Network must protect itself. Due to this, it can be difficult to ensure proper security on new chains.
Polkadot has a standard security system. It is easier to start the chain, but each para chain's link state ultimately obeys the global one.
There are no fixed rules when it comes to the management of and participation in the Cosmos Network. Each zone has a control mechanism of its own. Cosmos uses a circuit type of control.
When using Polkadot, one should rent slots. DOT token holders can update and modify membership rules. There are limitations. The in-between chains communication is not implemented fully yet and, accordingly, is not ready for use.
There are dangers on both systems. In Cosmos, an "evil" zone can damage the local one and originated tokens. While in Polkadot, a malicious act in one runner can, in theory, disrupt the overall global situation.
The Tendermint algorithm lies within the Cosmos. It does not scale to 1000 validators but is currently in use and quick with 200 of them running.
While Polkadot uses an algorithm of its own, an "overhanging gadget," which can scale up to 1000 validators. However, it is out-of-run now, so nobody knows when and if it is going to work at all.
Another project is called Block Collider**, which uses a radically different technical solution to accomplish the same tasks.
The idea that blockchains can be combined functionally formed the basis for considering the methods above of interaction between blockchains, and led to an understanding of the most promising cross-platform messaging. For cross-platform atomic exchanges, there is no need for establishing trust and a specialized system for combining blockchains.
Cross-platform sharing is based on trust. Is it possible to relay messages without establishing trust?
Complicating this issue is a problem that can be called the challenge of a lost branch. Suppose a service forwards a status message from one network (A) to another (B). In the process, it turns out that the transmitter was in the lost branch of blockchain A, then everything that blockchain B received would be invalid.
If one of the transmitted messages requires the launch of synthetic tokens on top of blockchains, then this will create an unacceptable cross-platform double waste. Permanent consideration of the risk of finding a repeater in a lost branch is the main problem of cross-platform information transfer systems.
The Cosmos and Polkadot platforms overcome this challenge in two steps:
An inter-blockchain communication (IBC) protocol is used to store the header block of each cross-platform operation in the form of a Merkle structure.
Use the header block history to maintain the unchanged balance of each token in both blockchains.
The combined use of such steps prevents the occurrence of cross-platform double waste.
Unfortunately, platforms like Oraclize do not consider the issue of a lost branch, and it would be nice if with their help, information would be transferred between blockchains.
Looking ahead, I would like to see the problem of the lost branch to be solved by the sending blockchain itself.
This solution could be organized using completion enhancement in Proof-of-Stake systems. That is what Casper FFG is aiming for. It is not yet clear how quickly completeness will help find a compromise solution in the parameterization of such a PoS system.
However, even with the guarantee of completion, other difficulties remain topical. We are witnessing a surge in new developments in blockchains. Most likely, this will continue in the coming years. A large number of chains appearing forces each blockchain to save and confirm blocks of the header of the Merkle structure from each chain with which the link will be established.
Each blockchain will swell from so many blocks. However, the use of the Blockchain Bridge will reduce this swelling with functional dependence on n! up to dependence on n.
We want the blockchains to interact directly with each other, without intermediary platforms. Now, this seems like an impossible fantasy. The difficulty is aggravated by the fact that networks like Bitcoin, even in the future, will not be able to switch from PoW to PoS with guaranteed completeness.
It is possible that in the distant future, intermediary chains will not be needed, but it is not yet clear how this can be done. In the short term, Cosmos and Polkadot have the opportunity to become a support for cross-platform information transfer.
Recently, the first elementary exchange between Litecoin and Decree was made.
Both blockchains do not use Turing-complete programming languages. The cross-platform atomic translation is easier to do with multi-purpose platforms using original contracts. It takes several years to fill the archives and begin their active use.
Another significant difficulty in cross-elemental exchanges is finding rates and coordinating orders. Here decentralized exchanges (DEX), like 0x and OmiseGo, begin to operate.
OmiseGo is an entirely decentralized platform, whereas in 0x orders are transmitted by repeaters (centralized entities); they send combined orders for approval to the circuit.
If complete decentralization of exchanges is required, including a book of orders on the blockchain, then platforms similar to OmiseGo that will perform simple cross-platform transactions will be useful. However, because of the inherent limitations of the blockchain (estimated time, mining race, mine sabotage, etc.), schemes similar to 0x will likely be used.
Now 0x works on the ethereal platform, but its road map describes the use of intersecting blockchains (this will probably be based on the technologies that enabled the Litecoin-Decree translation). Repeaters on 0x will place orders about finding prices and transfer information from one blockchain to another, to start the release of the deposited money in both chains.
Such a symbiosis will be combined with the absence of intermediaries, speed of action, comparison of orders with minimal guarantees of trust (the retransmitter sends only relevant information to both blockchains).
Polkadot and Cosmos will create a lot of noise for the next couple of months in the crypto space. Such systems eliminate the fundamental tasks of cross-platform communications, but they are not required to answer all questions related to the interaction of different blockchains.
You need to be aware that it is not always necessary to use the blockchain of blockchain. During the evolution of cryptocurrency systems, various models of trust, types of repeaters and a large number of original technical solutions will arise.
* Cross-platform atomic exchanges are possible only when both chains have an embedded deposit function. Some networks such as IOTA do not support escrow without trust in their blockchain, and cannot perform cross-platform atomic exchanges.
** A strong limitation of inter-platform atomic exchanges is settlement time. Transactions can be transferred no faster than the slowest block of the two blockchains involved is recorded. Block Collider conducts settlements that can occur more quickly than blocks are recorded in any of the chains. The use of cross-platform atomic exchanges for calculations that will happen faster than writing a block in any circuit is a rather attractive idea. Knowing how slow Bitcoin blocks are, Block Collider can get a new niche.
Melisa Marzett likes keeping track of events. Working as a freelance writer for cheap rewriting, she enjoys traveling while working on another article for some web resource. Even though she is a workaholic, she likes having fun. She is a vegetarian and she neither drinks nor smokes, but she enjoys physical activities and hiking in particular.
Currently there are two ways to combine different blockchains:
Send status messages from one chain to another. For this, artificial tokens will be needed (one-sided and double-sided bundles, side chains).
Perform cross-platform atomic exchanges (swaps). That is, users from different blockchains exchange tokens and at the same time, they do not need to trust intermediaries*.
The two most important projects in this space now are Polkadot and Cosmos. They each claim to be the "blockchain of blockchain". Both have internal tokens, which are used as payment for work performed to check the network.
The differences between these two networks are local vs. global validators, management & participation, in-between communication of chains, consensus algorithm, and development toolkit.
Each chain in the Cosmos Network must protect itself. Due to this, it can be difficult to ensure proper security on new chains.
Polkadot has a standard security system. It is easier to start the chain, but each para chain's link state ultimately obeys the global one.
There are no fixed rules when it comes to the management of and participation in the Cosmos Network. Each zone has a control mechanism of its own. Cosmos uses a circuit type of control.
When using Polkadot, one should rent slots. DOT token holders can update and modify membership rules. There are limitations. The in-between chains communication is not implemented fully yet and, accordingly, is not ready for use.
There are dangers on both systems. In Cosmos, an "evil" zone can damage the local one and originated tokens. While in Polkadot, a malicious act in one runner can, in theory, disrupt the overall global situation.
The Tendermint algorithm lies within the Cosmos. It does not scale to 1000 validators but is currently in use and quick with 200 of them running.
While Polkadot uses an algorithm of its own, an "overhanging gadget," which can scale up to 1000 validators. However, it is out-of-run now, so nobody knows when and if it is going to work at all.
Another project is called Block Collider**, which uses a radically different technical solution to accomplish the same tasks.
The idea that blockchains can be combined functionally formed the basis for considering the methods above of interaction between blockchains, and led to an understanding of the most promising cross-platform messaging. For cross-platform atomic exchanges, there is no need for establishing trust and a specialized system for combining blockchains.
Cross-platform messaging
Cross-platform sharing is based on trust. Is it possible to relay messages without establishing trust?
Complicating this issue is a problem that can be called the challenge of a lost branch. Suppose a service forwards a status message from one network (A) to another (B). In the process, it turns out that the transmitter was in the lost branch of blockchain A, then everything that blockchain B received would be invalid.
If one of the transmitted messages requires the launch of synthetic tokens on top of blockchains, then this will create an unacceptable cross-platform double waste. Permanent consideration of the risk of finding a repeater in a lost branch is the main problem of cross-platform information transfer systems.
The Cosmos and Polkadot platforms overcome this challenge in two steps:
An inter-blockchain communication (IBC) protocol is used to store the header block of each cross-platform operation in the form of a Merkle structure.
Use the header block history to maintain the unchanged balance of each token in both blockchains.
The combined use of such steps prevents the occurrence of cross-platform double waste.
Unfortunately, platforms like Oraclize do not consider the issue of a lost branch, and it would be nice if with their help, information would be transferred between blockchains.
Looking ahead, I would like to see the problem of the lost branch to be solved by the sending blockchain itself.
This solution could be organized using completion enhancement in Proof-of-Stake systems. That is what Casper FFG is aiming for. It is not yet clear how quickly completeness will help find a compromise solution in the parameterization of such a PoS system.
However, even with the guarantee of completion, other difficulties remain topical. We are witnessing a surge in new developments in blockchains. Most likely, this will continue in the coming years. A large number of chains appearing forces each blockchain to save and confirm blocks of the header of the Merkle structure from each chain with which the link will be established.
Each blockchain will swell from so many blocks. However, the use of the Blockchain Bridge will reduce this swelling with functional dependence on n! up to dependence on n.
We want the blockchains to interact directly with each other, without intermediary platforms. Now, this seems like an impossible fantasy. The difficulty is aggravated by the fact that networks like Bitcoin, even in the future, will not be able to switch from PoW to PoS with guaranteed completeness.
It is possible that in the distant future, intermediary chains will not be needed, but it is not yet clear how this can be done. In the short term, Cosmos and Polkadot have the opportunity to become a support for cross-platform information transfer.
Cross-platform elementary exchanges
Recently, the first elementary exchange between Litecoin and Decree was made.
Both blockchains do not use Turing-complete programming languages. The cross-platform atomic translation is easier to do with multi-purpose platforms using original contracts. It takes several years to fill the archives and begin their active use.
Another significant difficulty in cross-elemental exchanges is finding rates and coordinating orders. Here decentralized exchanges (DEX), like 0x and OmiseGo, begin to operate.
OmiseGo is an entirely decentralized platform, whereas in 0x orders are transmitted by repeaters (centralized entities); they send combined orders for approval to the circuit.
If complete decentralization of exchanges is required, including a book of orders on the blockchain, then platforms similar to OmiseGo that will perform simple cross-platform transactions will be useful. However, because of the inherent limitations of the blockchain (estimated time, mining race, mine sabotage, etc.), schemes similar to 0x will likely be used.
Now 0x works on the ethereal platform, but its road map describes the use of intersecting blockchains (this will probably be based on the technologies that enabled the Litecoin-Decree translation). Repeaters on 0x will place orders about finding prices and transfer information from one blockchain to another, to start the release of the deposited money in both chains.
Such a symbiosis will be combined with the absence of intermediaries, speed of action, comparison of orders with minimal guarantees of trust (the retransmitter sends only relevant information to both blockchains).
Conclusion
Polkadot and Cosmos will create a lot of noise for the next couple of months in the crypto space. Such systems eliminate the fundamental tasks of cross-platform communications, but they are not required to answer all questions related to the interaction of different blockchains.
You need to be aware that it is not always necessary to use the blockchain of blockchain. During the evolution of cryptocurrency systems, various models of trust, types of repeaters and a large number of original technical solutions will arise.
* Cross-platform atomic exchanges are possible only when both chains have an embedded deposit function. Some networks such as IOTA do not support escrow without trust in their blockchain, and cannot perform cross-platform atomic exchanges.
** A strong limitation of inter-platform atomic exchanges is settlement time. Transactions can be transferred no faster than the slowest block of the two blockchains involved is recorded. Block Collider conducts settlements that can occur more quickly than blocks are recorded in any of the chains. The use of cross-platform atomic exchanges for calculations that will happen faster than writing a block in any circuit is a rather attractive idea. Knowing how slow Bitcoin blocks are, Block Collider can get a new niche.
About the author
Melisa Marzett likes keeping track of events. Working as a freelance writer for cheap rewriting, she enjoys traveling while working on another article for some web resource. Even though she is a workaholic, she likes having fun. She is a vegetarian and she neither drinks nor smokes, but she enjoys physical activities and hiking in particular.