Inter-Blockchain Communication (IBC) Definition
Inter-Blockchain Communication (IBC) is a protocol that enables various blockchains to communicate and transfer assets among them securely and transparently, without the need for intermediaries. Pioneered by the Cosmos Network, it is comparable to how the internet enables separate computers to transfer data among each other.
Inter-Blockchain Communication (IBC) Key Points
- IBC facilitates communication and asset transfer among different blockchains securely and transparently.
- It is a scalable solution that eradicates the need for intermediaries, enhancing blockchain interoperability.
- Created by the Cosmos Network, IBC enables blockchains to retain their sovereignty while facilitating interconnection.
- It aids in overcoming the scalability and customization constraints of having a single, global blockchain.
What is Inter-Blockchain Communication (IBC)?
IBC is a protocol that functions as the framework for inter-blockchain communication. Best described as the TCP/IP equivalent for blockchain ecosystems, it allows blockchains to function as a network. It aims to resolve the scalability issue experienced in individual blockchains by enabling communication between them, increasing the capacity and efficiency of transaction processing across different networks.
Why is IBC Important?
IBC is designed to promote blockchain interoperability—a key challenge in the current blockchain ecosystem. Many cryptocurrency blockchains operate in silos, inability to interact or exchange data with each other. IBC breaks down these barriers, which could potentially lead to increased collaboration and value exchange within the wider blockchain ecosystem. By promoting interconnectedness, IBC also enhances the concept of decentralized finance (DeFi), providing users with more choice and flexibility when interacting with blockchain-supported financial applications and services.
Where is IBC Used?
IBC is primarily used in the Cosmos Network—an ecosystem of interconnected blockchains. However, because the IBC protocol is open-source, it can be used by any blockchain developer looking to enable communication and asset transfers with different blockchains. It has broad potential for usage anywhere that increased interoperability could be advantageous, including in decentralized exchanges, digital identity platforms, or multi-chain dApps, among others.
When was IBC Introduced?
IBC was introduced by Cosmos Network. The initial project was launched in 2014 and the ICO to fund the project took place in 2017. However, the IBC protocol itself, which is used to connect all the blockchains in the Cosmos network, didn’t launch until March 2021.
How does IBC Work?
IBC works by allowing distinct chains to exchange data and assets with each other. It does so by using a standard that can convert and transfer any type of token between the chains, relying heavily on token standards for accomplishing these processes. To maintain security and consistency, it relies on strong state machine replication and Byzantine fault-tolerant consensus protocols. This ensures accurate, reliable, and secure connection and transfers between the different chains.
