Blockchain Interoperability – The Biggest Challenges

Blockchain Interoperability – The Biggest Challenges
August, 08 2022

Blockchain Interoperability – The Biggest Challenges

Today, everyone is keen on investing in digital currencies like Bitcoin, Ethereum, and Dogecoin because of their potential for delivering high returns. 

But if everyone starts their own coins – which one can be trusted? Which one can be used?

Interoperability is the key factor in making blockchain simple and useful for your business and personal needs. 

What is cryptocurrency?

Cryptocurrencies are independent of any bank or government regulation and are a financial set-up of their own, with transactions recorded in a digital ledger called a blockchain

These cryptocurrency transactions are recorded using methods that make hacking, changing, or cheating the systems difficult. 

However, at present, they also occur in isolation, without any cross-chain communication. Everyone, it seems, wants their own coin. 

As a result, the blockchain is not utilized to the fullest extent, necessitating blockchain interoperability.

Understanding Interoperability

Blockchain interoperability is the term for the ability of various blockchain networks to communicate and transfer digital data and digital assets between blockchains. 

To understand the need for blockchain interoperability, consider the example of email systems. If any two mail platforms created on two distinct infrastructures were not interoperable, emailing would not be anywhere near as effective and significant as it is today. What if, for instance, you were unable to transfer emails from a Gmail account to an Outlook account? Email systems couldn’t have remained useful or popular for this long without technological features enabling communication between them. 

Operating systems for computers and mobile devices are another example. Imagine being unable to contact an Android or Windows user from an iOS smartphone. Users would have experienced tremendous difficulty due to such incompatibility. 

The success of blockchain technology now depends on interoperability, facilitating more efficient use, just as it did with email and cell phones. 

The Benefits of Blockchain Interoperability

Blockchain interoperability can allow the formation of powerful new digital products that leverage information from multiple blockchain networks simultaneously. 

While individual networks like Polkadot, Ethereum, and Solana have inbuilt blockchain ecosystems, blockchain interoperability has not been implemented to its full potential.

Challenges of blockchain interoperability can play an essential role in blockchain mining and cryptocurrencies if the benefits outlined below are unlocked:

General benefits of blockchain interoperability

  • Interoperability makes it easy for users to transact across blockchains.
  • It enhances multi-token transactions by enabling multi-token wallet systems.
  • It also offers diverse functionalities such as cross-chain transactions.

By adopting this technology, traditional businesses not already using blockchain technology can take advantage of increasing decentralization in the computing space. In addition, they can also realize several other benefits, including:


  • Greater levels of collaboration and inclusion by enabling a user-friendly experience, frictionless data sharing, and better chances to secure partnerships.
  • Flexibility in changing and connecting to different solutions with blockchain interoperability.
  • Achieving the fullest potential of even traditional software systems like healthcare, supply chain, or finance via communicating with other ecosystems or software.

Blockchain Interoperability Challenges

The requirement for a solution that permits universal communication between different blockchains arises from the need to overcome some of the basic problems hindering blockchain interoperability. The main challenge is that various blockchain platforms utilize different communication protocols.

As the majority of blockchains (and the applications built upon them) function in isolation, it is nearly impossible for consumers to benefit from distributed ledger technology’s (DLT’s) true advantages. Some important aspects of the current situation contribute to the difficulty include:

  •  Data privacy: The levels of data privacy offered by various blockchains make it difficult to decide which information should be exchanged and which should not.
  • Data security: Because blockchains use multiple encryption techniques, data cannot be securely transmitted between different blockchains.
  • Lack of standardization: Because there is no defined standard for blockchain interoperability, it is challenging for businesses and developers to know which standards their blockchains must adhere to.

Interoperability is currently not possible between two different blockchain networks. One way of achieving decentralized and secure consensus on the authenticity of transactions is one of the protocols that govern how blockchains work. 

However, that consensus can only function natively. A blockchain cannot perform that verification using its current rules after a transaction is sent outside of it.

Further, “blockchain” cannot be used in reverse. A blockchain that has been recorded on a network is immovable. Therefore, checking the information before submitting a starting node is really necessary. 

Furthermore, blockchain interoperability is a highly constrained procedure. Although this feature guarantees data security during transfer, consumers occasionally find it to be overly difficult.

Current Market Technology 

Networks like Cosmos, Polkadot, and Harmony have become well-known examples of how to integrate blockchain technology. 

Cosmos recently rolled out the Inter-Blockchain Communication (IBC) protocol. This protocol facilitates communication within the blockchain network and also enables the transfer of tokens between Cosmos and other IBC-compatible blockchains. 

Similarly, Polkadot relies on its Inter Chain Messaging Protocol that uses Bridges for blockchain communication. Harmony bridges Ethereum and Binance Smart Chain to its own ecosystem. 

Many other networks are exploring ways to make their blockchains more interoperable. Despite the fact that it is a significant problem in the field, there are options like Polkadot, Cosmos, and Harmony.

The Path Forward

Blockchain technology showcases a promising future in a variety of crucial industries, including finance and healthcare. However, blockchain interoperability is necessary to guarantee optimal productivity and trade profits. Interoperability can also aid in improving database management processes. 

Interoperability is now falling short of its due status as it has a few challenges. With blockchain interoperability, traditional businesses can achieve better ways of organizing their economic activities, reduce costs, enable frictionless data-sharing, and strengthen the trust factor in the ecosystem. 

A uniform protocol for communication across blockchain networks is surely going to develop. And once it is, there are innumerable advantages to businesses and individuals.



Share On:

Previous articles

How Proptech is Transforming Brokerage Services
February, 06 2023

How Proptech is Transforming Brokerage Services

The real estate industry has been transformed by the rise of proptech, a term used to describe the integration of technology in property transactions and management. Proptech has changed the way people buy, sell, and rent properties, and has brought significant improvements to the efficiency and convenience of real estate brokerage services. In this blog, […]

Discover the Astonishing Benefits and Real-World Examples of AI in Ecommerce
February, 02 2023

Discover the Astonishing Benefits and Real-World Examples of AI in Ecommerce

What’s the best way to convert an existing customer using AI? A study by STELLAService found that personalized product recommendations can lead to a 10-30% increase in conversion rates. Salesforce found that 77% of customers are more likely to make a purchase if the shopping experience is personalized to their individual needs and preferences. It’s […]

Ready to build and scale your offshore team?