Why is Multi-Chain Important for the Future of Web3?

Multi-chain is a basic term that promotes interoperability and decentralization in the blockchain ecosystem. At the heart of the interoperable blockchain concept is a multi-chain future and the development of cross-chain infrastructure.

It's important to understand the difference between multi-chain and a project called MultiChain that helps organizations build applications.

What is Multi-Chain?

Multi-chain has two possible meanings. First, a cryptocurrency can be considered “multi-chain” if it is available on multiple blockchains. For example, USDC as a stablecoin can be found on Ethereum, Solana, Avalanche, TRON, Algorand, and other blockchains.

Second, a blockchain protocol, also called a blockchain platform, can be considered “multi-chain” if it allows developers to build several independent blockchains on top of it. Clear examples of multi-chain protocols are Polkadot and Cosmos.

Multi-Chain vs Single-Chain

Ethereum is an example of a single-chain protocol that does not allow developers to create independent blockchains. In contrast, Ethereum supports decentralized token creation and applications on a single chain.

The main advantage of multi-chain protocols compared to single-chain protocols is scalability. With a multi-chain protocol, it is possible to easily create new blockchains to handle additional transactions as user demand increases.

Popular scalability solutions for single-chain protocols are layer-2 protocols, such as Bitcoin Lightning Network and Ethereum Plasma, that operate on top of the main blockchain rather than running parallel to it.

Although layer 2 improves scalability, this approach is more complex and gives developers less control compared to multi-chain protocols.

Being on multiple blockchains provides the advantage of greater scalability, seamless communication between blockchains, while eliminating the need for intermediaries. Multi-chain technology creates a network for simultaneous communication between blockchains without the need to move assets from one network to another.

Difference between Multi-Chain and Cross-Chain

Multi-chain refers to projects that exist on different networks but use the same security infrastructure. Such projects do not always have interoperability between chains, so users may need to use a centralized exchange to trade assets from one chain to another.

Meanwhile, cross-chain is a slightly different concept. Cross-chain includes the ability to connect blockchains that are independent of each other. Cross-chain infrastructure allows users to transfer assets and/or information between two blockchains without the need for an intermediary.

Common examples of this technology are decentralized cross-chain bridges and cross-chain exchanges, such as those offered by AtomicDEX.

How Multi-Chain Protocol Works?

Multi-chain protocols divide the blockchain into a consensus layer and an application layer. The consensus layer forms the underlying security infrastructure, allowing projects to operate across multiple chains.

The application layer above allows applications to communicate even though they exist as independent ecosystems. With this approach, interoperability is created without sacrificing security.

The Importance of Multi-Chain Improved blockchain interoperability and user experience are key to widespread adoption of web3 technologies. Until barriers between blockchains can be overcome, the process of transferring information and assets between blockchains will continue to be a challenge.

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DISCLAIMER: This article is informational in nature and is not an offer or solicitation 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.