What is Interoperability?

Cross-chain interoperability or also known as blockchain interoperability is the capacity to view and exchange data between different blockchains. Exchanging assets between different blockchains without the need for a centralized custodial exchange is one of the real advantages of blockchain interoperability.

The term "interoperability" describes the capacity of multiple systems, gadgets, or parts to function as a single unit, share data, and cooperate with each other regardless of which vendor or technology was used to create them. The capacity of various blockchain networks or protocols to communicate, share data, and carry out transactions with each other is usually implied by interoperability in the context of blockchain technology, fostering a more cohesive and effective digital ecosystem. For multiple technologies and platforms to collaborate and communicate seamlessly, interoperability must be achieved.

The development of a blockchain relies on interoperability as it allows users to transact across multiple platforms. Blockchain interoperability solutions already exist, but much remains to be developed to connect disparate blockchains such as Ethereum and Bitcoin . 

One common choice is wrapped tokens, sometimes referred to as proxy tokens, of which Wrapped Bitcoin (WBTC) is the most preferred. On the other hand, wrapped tokens require a reliable custodian to store user funds or a secure mint/burn procedure to guarantee a stable supply of cryptocurrency assets.  

An example of a project actively addressing native blockchain interoperability is Komodo, whose AtomicDEX functions as a decentralized exchange compatible with 99% of crypto assets. This interoperability is achieved through atomic swaps on AtomicDEX, secure digital asset transactions between users using non-custodial wallets. This mechanism builds decentralized connections or bridges across various blockchains and protocols. Notably, AtomicDEX facilitates native cross-chain trading, eliminating the need for wrapped tokens. Another project, Cosmos, is also dedicated to interoperability, utilizing inter-blockchain communication (IBC) protocols.

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DISCLAIMER : This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.