With every passing day, we see the maturing of the blockchain technology and innovations taking place which offer solutions to the problems that have been considered hindrances towards the adoption of the distributed ledger technology and cryptocurrencies. The scalability and volatility issues have been in the limelight so much that some of the other addressable improvements were put on the back burner. One of these has been the ability of individual blockchains to interact with each other – for example, cross-chain transactions between Bitcoin and Ethereum networks – mostly because individual blockchains employ varying protocols, algorithms and security procedures to conduct transactions. This issue finally seems to have caught the eye of developers as we have seen a couple of notable solutions emerge recently. Let's see what they are & how they work.
DEx.top, a decentralized digital Exchange (DEX) and iBitcome, a mobile wallet provider collaborated to develop an Open Federated Gateway Protocol (OFGP) based on an open source technology. The protocol enables the cross-chain transactions between the Bitcoin and Ethereum blockchains. The first version of this federated blockchain technology called Mallow was launched on October 24, 2018, accompanied by a block explorer, which gives the users the ability to keep an eye on the flow of their digital assets and the transactions on the network as and when they please. This process will guarantee efficiency and transparency. Users will also have the ability to create their gateways which can be used by anyone – thus creating healthy competition and minimizing centralization. Mallow is one such gateway being supported by the two biggest BTC mining pools BTC.com and Antpool. It will use the Byzantine Fault Tolerant Raft algorithm to achieve higher scalability.
According to iBitcome, the trading between the two blockchains is accomplished by the creation of an intermediary digital token called Wrapped BCH (WBCH). WBCH will be pegged to Bitcoin Cash (BCH). WBCH will be first of its kind stablecoin which is pegged to another Cryptocurrency. The pegged coin will also serve to address the problem of liquidity that often haunts the decentralized exchanges like DEx.top. iBitcome has also launched an OFGP compliant Crypto wallet available on both iOS and Android mobile devices. The wallet supports Tether, Bitcoin, BCH, and Ethereum where users can also access DApps. The wallet will use AES-128-CTR encryption as the security feature on the wallet to prevent the hacking of the private key. It also employs the digital ID system as an added security feature.
Another plausible solution for cross-chain transactions has been presented by Wanchain which wants to bridge the Ethereum and Bitcoin Blockchains – an interaction between the two networks. The test net version (invitation only) of this platform called Wanchain 3.0 was launched recently with the aim of going live by the end of 2018. Similar to OFGP, an intermediary digital coin called WBTC (Wanchain’s Bitcoin cross-chain token) will be used to conduct cross chain transactions on the Wanchain network seamlessly. Wanchain’s partner, Kyber DEX (a decentralized exchange), will be offering BTC trading pairs based on the Wanchain’s BTC token allowing for drastic increases in trading volume and liquidity. Once the Wanchain network goes live, any DApps, Protocols, decentralized exchanges or any other projects built on the Ethereum blockchain will be able to break the barrier between them and the entire Bitcoin community. For now, they are concentrating on fool proofing their system before the final launch.
The successful implementation of these solutions will be a great step forward in the integration and assimilation of different blockchains, and it is hoped that support for other public blockchains is going to follow shortly. This interoperability of blockchain networks is indeed an essential step towards a transition to a genuinely digital global economy.
Faisal Khan, Data Driven Investor, contributed to this article, which can also be found here.
The views and opinions expressed in this article are those of the author and do not necessarily reflect those of CDOTrends.