Decentralization, Multi-Chain, Interoperability, Token Bridges (What Do They All Mean?)
What is Decentralization?
Decentralisation can be said to be defined as form of governance where there is no central authority or body.
Decentralisation is the process of dispersing functions and power away from a central location or authority. In a decentralised architecture, it is impossible to discern a particular centre. Blockchain technologies such as Ethereum and Cardano are examples of decentralised architectures and systems.
Decentralisation on the blockchain refers to the transfer of control and decision-making from a centralised entity (person, organisation, or group of people) to a distributed network.
Decentralised networks seek to reduce members’ trust in others and dissuade them from wielding control or command over each other in ways which would compromise the network’s efficiency.
Benefits Of Decentralisation
Decentralisation helps to streamline asset dispersion so that promised services are delivered with greater execution and consistency, as well as a lower risk of a catastrophic letdown.
Decentralisation also helps in facilitating a trust-less setting, facilitates growth, reduces degree of shortcoming.
Multi-Chain Explained
The MultiChain technology in blockchain is an ability for an asset which may be a cryptocurrency or an NFT to exist on multiple blockchain platforms while also retain its security.
Multi-Chain is built with a comprehensive set of features that include permissions management simple per-chain configuration.
A multi-chain ecosystem is one in which several blockchains are interconnected with the ultimate aim of boosting the user experience, improving efficiency and allowing for wider adoption. But it requires effective cross-chain solutions.
Multi-chain solutions will change the blockchain space from an “interesting new technology” to an essential, high-growth industry.
The blockchain industry market size was estimated to reach more than $21 billion by 2025.
The market capitalisation of the cryptocurrency market as a whole already reaches over $1.9 trillion. An ecosystem that was once defined by its tight-knit community and exclusivity now reaches governments, businesses, institutional investors and individuals who are all becoming more positive about the evolving space.
Multi-chain is seen to solve scalability issues by using a dual chain data storage method. Every piece of information published to a stream can be on-chain or off-chain as desired.
Interoperability
Blockchain and distributed ledger networks are exploding by the day. Interconnecting these new chains is becoming a necessity as more people continue to take note of the emerging technology and its capabilities.
Interoperability enables blockchain to share and access their data and interoperate with one another. The ability through which blockchains share and communicate with each other is called blockchain interoperability.
Blockchain interoperability allows data and value to be transferred across different networks. It has become an increasingly important feature of Web3.
To achieve a blockchain interoperability, there are 3 main gateways achieve this and they include
- Cross Authentication
- Oracle
- API Gateway
Oracle Authentication
For a Cross-Chain Authentication, there are three technical methods which are Rotary Schemes, Relays and Hash Locking.
A. The Rotary schemes are executed by trusted parties that help participants on Blockchain 1 confirms that some events happened on Blockchain 2.
B. Relays are systems inside blockchains that can validate and read events on another blockchain.
C. Harsh Locking means setting up operations on Blockchain A and blockchain B that have the same trigger
Oracle
Oracles can be defined as an agent that transfers external data to the Blockchain platform for on-chain use and can be done using smart contracts that relays real world information to the Blockchain.
API Gateway
API simply means Application Programs Interface, it is a piece of codes that govern the access point to a server and guides developers with rules to the database.
Token Bridges
What is a bridge token?
A simple definition of Token Bridge is described as an interoperability protocol which allows users to move their own assets to tokens between networks/blockchains in a quick and cost-efficient manner.
A Token bridge lets you port assets from one blockchain to another, solving one of the main pain points within blockchains — a lack of interoperability. Since blockchain assets are often not compatible with one another, bridges create synthetic derivatives that represent an asset from another blockchain.
When one bridges a token and send from example one Ethereum to Cardano wallet, the wallet will receive a token that has been wrapped by the bridged, the Cardano wallet will receive a wrapped version of Ethereum that has been converted to a Cardano Native token.
Why Bridge A Token?
There are a lot of benefits associated with bridging tokens or assets from one blockchain to another.
One could be that the blockchain you port the asset might be cheaper and faster than the its native asset.
This is certainly true for blockchains like Ethereum where high transaction fees could make it difficult for newbies to get involved in Defi.
Here we come to the end of this article which explains Decentralisation, Multi-chain, interoperability, token bridges and its meaning and how they can be utilised.
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