Cross-Chain Definition
Cross-Chain refers to the interaction between different blockchain networks, enabling the exchange of information and assets. The purpose of cross-chain technology is to solve the interoperability issue among different blockchains, allowing them to communicate and transact with each other seamlessly.
Cross-Chain Key Points
- It allows the exchange of information and assets between different blockchains.
- It aims to address the interoperability issue among blockchains.
- It helps in enhancing blockchain’s scalability and utility.
- It supports heterogeneity and sustenance of the decentralized nature of blockchains.
What is Cross-Chain?
Cross-Chain is about facilitating seamless interaction between different blockchain networks. This technology is used to enhance the interoperability of blockchain, a distributed ledger technology, allowing different blockchain systems to communicate and conduct transactions fluidly with one another.
Why is Cross-Chain Important?
Cross-Chain technology is crucial because it breaks down barriers between various blockchains, enabling them to function as a unified network. This increases the scalability potential and utility of the blockchain networks by allowing assets to move freely across different blockchains. It also aids in maintaining the decentralized nature of the blockchain, as it supports heterogeneity, allowing each blockchain to maintain its unique features while still communicating with others.
Where is Cross-Chain Used?
Cross-chain technology is mostly used in the decentralized finance (DeFi) sector where different cryptocurrencies on distinct blockchains need to be transacted. It is also used to facilitate interoperability in cross-chain decentralized applications (DApps) and platforms.
When was Cross-Chain Introduced?
Cross-chain technology, as a concept, emerged along with the birth and evolution of multiple distinct blockchains. The demand for cross-chain capabilities has increased in recent years, particularly since 2018, coinciding with the surge in decentralized finance applications and platforms.
How Does Cross-Chain Work?
Cross-chain technology essentially involves three major methods: Notary schemes, sidechains/relays, and hash locking. Notary schemes depend on trusted third-party entities for cross-chain transactions. Sidechains/relays allow digital assets to be moved between different chains. Hash locking, on the other hand, involves a cryptographic proof that facilitates cross-chain transactions.
These methods work together to facilitate direct transactions and communication between distinct or heterogeneous blockchains.
