News Atomic Swaps and a Multi-Blockchain World

Atomic Swaps and a Multi-Blockchain World

-

- Advertisment -

In the 1980’s and early 90’s, most businesses had a LAN, or “Local Area Network.” This technology allowed a company to connect computers in a network, usually in a very limited, local area. Some larger companies might have employed a WAN (Wide Area Network), which covered a bigger area, but was still mostly confined to a single corporation’s computers. A challenge for IT professionals in that era was how to safely interact their LAN’s with other company’s LAN’s. Many tech articles were written and many attempts were made with limited success. Then the Internet became ubiquitous and the problem was solved. The idea of disparate, incompatible networks is now unthinkable.

Cross-Chaining

Blockchain technologies are going through a similar evolution today. Since the advent of Bitcoin, many other cryptocurrencies and blockchain technologies have been created, but in most cases, these various blockchains are incompatible. You can’t send Dash to the Bitcoin blockchain, nor can you send Bitcoin to the Ethereum blockchain. Blockchains are like a bunch of incompatible LAN’s. The only way to convert from one cryptocurrency to another is through a centralized, third-party exchange, such as Shapeshift or Poloneix.

But this might be changing, and soon. Recently, the first cross-chain “atomic swap” was announced. The idea of an atomic swap has been around for a few years, but this was the first time it occurred in a live environment. Essentially, atomic swaps allow two or more people to exchange one cryptocurrency for another directly on the respective blockchains, without the need for a third party exchange.

Atomic swaps are not the only solution to cross-chain compatibility, either. There is also ARK’s Smartbridge Technology, which allows users to trigger events on a blockchain from another blockchain. For example, you could trigger an Ethereum smart contract from Ark. As these types of technologies develop, the idea of competing, non-compatible blockchains might seem as antiquated as incompatible LAN’s.

Choose Your Own Crypto

What does this mean in real life? How would a world of compatible blockchains look? A year and a half ago, I wrote about this possible multi-blockchain world, and what I predicted is coming closer to reality. Different blockchain projects will be focused on different use cases. For example, one blockchain currency could be primarily a store of value, another could be digital cash, another for smart contracts, and so on. But that’s not the only way projects will be differentiated. Different cryptos could also become de facto standards in different industries. Digital storage companies might accept primarily one form of cryptocurrency, health care providers another, and gambling institutions yet another. There could even be industries which create their own private currencies with entry points for public transactions.

This might sound confusing, however: How will people pay for their services if every industry takes a different form of money? Because of the ease of exchanging currencies, each person can select the cryptocurrencies she primarily wants to spend and those she wishes to hold. Even if her digital storage bill is in one crypto, and her doctor’s bill in another, she would pay with her preferred currency, which would be automagically exchanged for the provider’s choice instantaneously and without the need for a third party. In the future, many currencies will thrive and be used by the masses (although I’m sure there will be corners of Reddit where disciples of their One True Coin rage against this crypto-agnostic world).

A multi-blockchain world has multiple advantages. First, it might be the solution to the ongoing scaling debate. Perhaps one blockchain can’t process the world’s transactions, but what about thirty or forty or even more blockchains? Miners and node owners can move between blockchains as it is profitable for them, with an equilibrium being established by free market competition for their services.

Another advantage is that using many cryptocurrencies establishes a truly free market for money. Each cryptocurrency project would compete for users, miners, and businesses in establishing their bonafides. The most successful currency in 2025 might fade away by 2035, replaced by a better, nimbler competitor. And with easy exchanging of currencies, users can move between currencies as easily as changing lanes on the highway.

Frictionless Future

One thing this potential multi-blockchain world emphasizes, however: the real competition is not Bitcoin vs. Dash, or Monero vs. ZCash, or Ethereum vs. Rootstock; it’s cryptocurrency vs. fiat. The governmental creators and maintainers of fiat resist a free market of money like a two-year-old told to take a nap. Because they know when everyone—users, merchants, industries, even AI robots!—can choose his preferred monetary unit without adding any friction to his daily transactions, then fiat is sure to fade away, relegated to one single industry: government.

Fans of cryptocurrency would do well to redirect their efforts from the crypto circular firing squad and focus instead on the real barrier to a more free world: government-backed fiat currencies. Being a maximalist of any one individual crypto will be like believing a Novell network must be implemented everywhere by everyone. In the future, it won’t be one individual cryptocurrency that dominates, but many blockchain-based technologies that will rule in a diverse, freely-chosen economy.

Source link

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest news

Mercuriex Cryptocurrency Exchange Launches New Utility Token, SURF

MercuriEx Cryptocurrency Exchange, originally developed in 2017, came under new ownership in December 2019. Since taking over the exchange,...

Fungibility: Bitcoin Mixers Favorite Term That No One Understands

Fungibility, perhaps the most important concept when dealing with a decentralized and anonymous currency, but does bitcoin...

Crypto can’t thrive in the real world – but stablecoins can

We can safely say that the hype about cryptocurrencies is pretty much over. The claims of Bitcoin...

How to double your crypto

Most of us have a small gambler deep inside our souls. We love to feel the thrill...
- Advertisement -Atomic Swaps and a Multi-Blockchain World

Cryptocurrency Top Security Risk Concerns: What You Can Do to Protect Your Crypto

A report by CipherTrace revealed that in the first half of 2019, criminals and fraudsters stole more...

How has Bitcoin of America Changed the Cryptocurrency Industry?

Who is Bitcoin of America? Bitcoin of America is a U.S. based digital currency...

Must read

Mercuriex Cryptocurrency Exchange Launches New Utility Token, SURF

MercuriEx Cryptocurrency Exchange, originally developed in 2017, came...

Fungibility: Bitcoin Mixers Favorite Term That No One Understands

Fungibility, perhaps the most important concept when...
- Advertisement -Atomic Swaps and a Multi-Blockchain WorldAtomic Swaps and a Multi-Blockchain World

You might also likeRELATED
Recommended to you