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Imagine you are about to deposit your savings at a new bank. As you fill out the forms, you come across a news story about a $624 million theft caused by a security breach in the bank’s computer system.
You start searching for safer alternatives, but evaluating each bank’s back systems proves to be difficult. In fact, $2.9 billion was stolen from banks due to similar issues between 2021 and 2023 alone. This scenario might make anyone hesitant about their next move.
Surprisingly, the above scenario is not about banks but cross-chain bridges in the cryptocurrency world. Various breaches have occurred due to complex designs, unexpected backdoors, and outright fraud. These incidents are devastating for users relying on cross-chain solutions and damage the reputation of blockchain technology.
However, beyond the headlines, a crucial truth emerges: cross-chain infrastructure is core infrastructure. As long as blockchain holds the potential for positive change and mainstream adoption remains the goal, cross-chain solutions will be essential. Let’s examine the current state of blockchain interoperability.
Core Infrastructure First, Product Second
For those new to the concept, blockchain interoperability is key to addressing the fragmented nature of blockchains. Blockchains, as trustless systems, cannot communicate with other blockchains without intervention. This is where cross-chain solutions come into play, enabling data to flow seamlessly from one blockchain to another. For users of dApps and DeFi protocols, interacting with cross-chain solutions is often necessary as many significant projects are built away from the Ethereum L1 blockchain.
Currently, blockchain interoperability is characterized by fractured incompatibility. Numerous competing interoperability projects create bespoke cross-chain products of varying security and reputation. This incompatibility is one of the great ironies of blockchain and hinders the ability of users, enterprises, and regulators to assess the security of each option, jeopardizing widespread blockchain adoption.
The solution lies in a shared framework for interoperability.
Blockchain interoperability cannot be the responsibility of a single project. It needs to be an industry-wide effort. Instead of an “everyone for themselves” mentality, the industry must collaborate to decide how to transmit, receive, and verify data from another blockchain.
Adopting a shared framework for interoperability does not threaten existing interoperability projects’ business models. Instead, it would form a secure core infrastructure layer upon which unique products can be built, catering to different use cases. This differentiation is what truly matters.
Consider the traditional finance world, where thousands of banks thrive on secure, shared infrastructure. Similarly, web2 businesses rely on the Internet protocol suite, enabling end-to-end data communication between distinct network devices. A shared framework for interoperability, with clear architectural guidelines and interface definitions, is the path forward. Blockchain interoperability must be core infrastructure first, product second.
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Temujin Louie is a communications specialist with over ten years of experience in driving the adoption of transformative digital technologies. He was introduced to blockchain in 2012 during his graduate studies at the London School of Economics and Political Science, where he studied Bitcoin’s impact on incumbent power structures. Temujin is an expert in blockchain interoperability and has the rare talent of simplifying intricate technological concepts into engaging narratives. He has served as a bridge between the tech world and the broader public, offering insights and strategic acumen to both tech startups and global enterprises. Temujin joined Wanchain in March 2021 and currently serves as Wanchain’s CEO.
