Blockchain is expected to enable the world’s largest enterprises, organizations, and nations, as well as the average person to seamlessly trade and transact anytime, anywhere. But a barrier to the mass adoption of this revolutionary technology has always been that blockchains are decentralized and standalone. Each chain is independent and has a different set of codes and therefore prohibits interconnection and communication with one another.
Hence, interoperability and scalability will remain a challenge for this disconnected landscape to fully realize the promise of blockchain technology. This was until March 2021, when one key protocol was created that addressed this problem. The protocol created endless possibilities for blockchain mass adoption in the near future – a reality where independent multi-chains of big or small enterprises are connected and interfaced with one another, forming a huge web of blockchains albeit having different code formats and structures.
That key element is called the Inter-Blockchain Communication.
While there are several protocols that aim to solve the problem of blockchain interoperability, the Inter-Blockchain Communication (IBC) protocol is the one we’re betting will come out on top. The IBC is an open-source protocol used to relay messages between independently distributed ledgers, linking one blockchain to another. Simply put, they act as “relays” for data to be transmitted to blockchains, which then creates a whole blockchain network. This interconnected network of chains, or the “Internet of Blockchains”, is called Cosmos.
As of December 2021, there are 25 blockchains interconnected in the Cosmos network. This number is expected to skyrocket up to 200 blockchains next year. There has been massive expansion in scale through connection to various decentralized exchanges (DEXs) and prevalence of cross-chain activities. The unexpected growth of IBC signifies the critical role of blockchain interoperability and its influence on mass adoption of blockchain systems.
The mass adoption of blockchain technology is anticipated to follow within a few years of IBC’s conception. The majority of the 10,000 blockchain networks in existence at present are isolated, making it difficult to implement them at an institutional level. IBC provides the solution: industry players such as banks, insurance firms, healthcare institutions, energy companies and others can leverage the blockchain tech to connect to other institutions and reach their fullest potential.
Imagine its growth prospects in the years to come and the plethora of possibilities it may present to enterprises and institutions for directly trading, storing and transferring data, and transacting even between multiple nations without the necessity of an intermediary, a middleman. Small and large enterprises can be in constant communication and collaboration with less friction, as they need to be in their daily operations. This will allow for better efficiency in nearly every software process, as well as improved transparency and accountability – and that’s just what the industry has come up with so far.
The IBC harnesses the full power and potential of the blockchain network, as it allows the chains to work with other software despite the differences in coding. The IBC and Cosmos are expected to encourage the mass adoption of blockchain systems as it presents the value of interoperability and scalability in firms’ operations.
Interoperability is crucial for blockchain for it to be used in its fullest potential. As MIFSA Owner and Economist Carlo R.W. De Meijer said, “Interoperability would enable smooth information sharing, easier execution of smart contracts, a more user-friendly experience, the opportunity to develop partnerships, and the sharing of solutions.” In industries where supply chain plays a big role such as in trade, finance and healthcare, decentralized and distributed blockchains that are separate from each other can be inefficient in communicating with each other.
It would cost more money, time and energy to transact with this particular model, not using the IBC. An example of this inefficiency is present in the space of cryptocurrency. Traders who wish to exchange Bitcoin (BTC) for Ethereum (ETH) need to use a third party service like a trading exchange to convert their coins. The networks cannot communicate with each other directly so the user must rely on a third party or another business to assist with the transaction. While the aim of IBC is to serve as a standard connection to varied yet compatible blockchains, “peg zones” are specialized blockchains used in the Cosmos network to communicate with incompatible blockchains such as BTC and ETH. Both IBC and peg zones enable individuals, enterprises and organizations to have fewer and smoother transactions via direct transfer from one crypto to another.
IBC will reduce the number of transactions needed to execute a specific protocol, which means lower transaction costs. For companies executing thousands to millions of transactions with other companies and stakeholders, this will add up to significant savings on total operation costs. Aside from blockchain getting rid of costs from the middlemen, IBC also provides the solution of cutting certain steps and costs which will not only simplify and improve operational efficiencies, but also optimize the supply chain and elevate the way we deliver products and services to the public.
Many advancements are in place for the blockchain ecosystem, and it’s happening at a very fast pace. As an example earlier, cryptocurrency trading will move to a new stage as Cosmos is set to debut Emeris this Spring of 2022. Emeris is a cross-chain decentralized finance (DeFi) tool which will serve as a one-stop portal for all crypto apps, no matter what blockchain they run on. Emeris introduces the browser extension wallet, which will allow users to manage tokens cross-chain and integrate other protocols and DEXs. This will revolutionize crypto trading, enabling traders to have hassle-free transactions with less to no friction.
Through IBC, Cosmos is also looking to connect major blockchains such as Bitcoin, Ethereum, Polkadot and Celo in the network which will pave the way for the stream of varied tokens in the Internet of Blockchains. Not only that, but the brains behind Cosmos are planning to go beyond the Cosmos and connect to future and existing external blockchain ecosystems, all with the help of IBC. The possibilities are endless, and the change in the business landscape is happening now.
If yours is a forward-thinking company that would like to join in on this exciting new revolution and “futurize” their operations, Gigster offers the technical know-how and the managed pool of talented, skilled team with expertise in blockchain technology and NFTs. No need to spend grueling months hiring your own IT and building from the ground up. Let our experienced development teams ensure that you go above and beyond the current landscape and make a transformational impact on the industry you’re in.
