The Future of Cross-Chain

As the cryptocurrency industry grows, we’re seeing an increasing number of blockchains, but not all of them will be used in a cross-chain ecosystem. Only one may remain for retail or one per country since there is no need for more than Ethereum 2.0 with a lot of nodes and layer 2 solutions.

For example, Solana can take second place owing to their quickness and low transaction costs, but in the end, blockchains competing today will have to specialize and improve because only one or two blockchains will be used by the general public since it is less expensive not to connect from one blockchain to another. There are only two or three distinct types of databases now, with the bulk of them holding 1% of the market.

Why Do We Need a Cross-Chain Ecosystem

Cross-chain will advent in all the aspects of the blockchain ecosystem. It will assist many present DeFi tools and cryptocurrencies discover new users and transacting off-chain. This will subsequently result in improved enterprise improvement and wider blockchain adoption.

Nowadays, it isn’t that hard to transfer US Dollars to another currency, and, despite the fact that there are no global banks that would offer services to all nations across the world, there are a slew of tools to facilitate cross-bank transfers. All you have to do now is visit the internet and select the one that works best for you. With the same logic, a cross-chain mechanism can ease up cryptocurrency transaction across different DeFi platforms.

How Does Cross-Chain Work?

In order to connect different blockchains, there were developed blockchain bridges, A blockchain bridge is a connection between two or more blockchains that allows them to interoperate. It allows users to communicate in any type of blockchain. Users may make the most of all blockchains and remain secure by using trustless bridges. Fast transactions are possible at a low cost, assets from one blockchain may be moved to dApps on another, and multiple platforms can be used to run dApps. There are several key characteristics of a good cross-chain solution.

• Atomicity: Atomicity refers to the consistency of a transaction across chains. A cross-chain interaction must have an impact on both blockchains simultaneously or not at all.
• Consistency: In order to make a secure future transaction, all connected blockchains must have a common history.
• Decentralized: Naturally, any cross-chain solution must adhere to the main blockchain principle of being decentralized and trustless.

Real-World Cross-Chain Transaction Examples

Exchanges like Binance are gigantic but they can only transit one blockchain in the end, theirs like Binance’s which is in the top 100 most visited sites worldwide. But they will have to find the improvement and find the cheapest, fastest, and most interoperable route in order to avoid additional costs for the bridging because many will not hold and can quickly become useless. Therefore, there is a huge possibility that ETH 2.0 will overpass Solana in speed and cost of transactions, also exceed Visa, PayPal, etc.

The Drawbacks and Advantages

With all this said, there are pros and cons with using the Ethereum blockchain, it is decentralized and therefore it has to be regulated, otherwise, it will become illegal. Blockchains like Binance can come into play since they are easier to be regulated because of their centralization and users can turn to them since they are offering fast and cheap transactions, of course,

Binance will have to improve a lot to catch other blockchains such as Solana but they have room to improve their blockchain and end up like winners by improving their security and regulation. Users from the USA never wanted it, but their exchanges cannot take a risk of having a token like Coinbase or Kraken and since Solana is from the USA, they can go with her.

Final Thoughts

In the end, exchanges may become the upper hand and if Binance continues to rise then it can replace Ethereum simply by not going through their network but for this, they will have to list tokens that use Ethereum.

Disclaimer: The opinion expressed here is not investment advice – it is provided for informational purposes only. It does not necessarily reflect the opinion of EGG Finance. Every investment and all trading involves risk, so you should always perform your own research prior to making decisions. We do not recommend investing money you cannot afford to lose.