Cross-chain is a technology that enhances interaction between independent blockchains. It allows for the transfer of crypto-assets or digital data from one blockchain to another, thereby increasing user functionality.
This term is associated with several derivatives, such as “cross-chain bridge” and “cross-chain compatibility”.
Why is cross-chain technology needed?
Cross-chain technology emerged due to the structural differences between various blockchain networks (you can read more about blockchain here), which significantly limit the transfer of assets between them. For instance, users cannot directly exchange information due to the lack of interoperability and the isolation of networks like Bitcoin and Ethereum.
The absence of interoperability and the limited data exchange between different networks slows down blockchain development. However, due to the similar structures of different blockchains, cross-chain technology has been developed to address these issues.
Special algorithms (protocols) are used for cross-chain transfers, allowing interaction with multiple blockchains without intermediaries. The compatibility of different blockchains is facilitated by cross-chain bridges.
Enhancing the interoperability of various blockchains opens up new possibilities for their use across different industries while maintaining the decentralized nature of blockchain. Although cross-chain technology is still under development, it has significant potential to become an effective mechanism for improving interoperability.
