Blockchain is the technology of the moment, not a week goes by without a new way of harnessing the abilities of blockchain appearing, which is great for the industry. However, with a growing number of projects all using different blockchains, some bespoke private solutions, some tailored public ones, some piggybacking onto existing blockchain networks, there is a danger of increased fragmentation that could cause issues long term. That is the problem that a new paper published by Parity Technologies Ltd.’s Gavin Wood is looking to solve, with the new Polkadot network that will allow transaction data exchange between different blockchains.
Read the full story below.
The last few years has seen incredible interest in blockchain technology, everything from art identity verification to transportation tracking has been targeted for improvement by implementing blockchain solutions, along with of course numerous insurance and financial institutions. While many of the more eclectic uses for blockchain build upon the public blockchains we know, especially Bitcoin’s blockchain, many of the financial applications for blockchain are being tested on private, bespoke blockchain designs.
Many see this as a potential problem, with individual bespoke blockchain projects unable to interact with each other resulting in a further fragmentation of global financial operations. This is mirrored within the fintech industry itself, as newer cryptocurrencies start to gain in popularity, the range of blockchains in use grows, and the challenges that interacting with all of them grows.
However, Gavin Wood from Parity Technologies Ltd has just released a paper outlining a potential solution to these issues in the form of a new network that will allow intra-blockchain connection, that he has named Polkadot.
The proposed network would allow transactions or contracts to pass between different blockchains, while maintaining pooled security and integrity across the chains (unlike side chains that need individual security). The network, Woods says, would allow “wildly different chains, some might be open and public chains like Ethereum and Bitcoin, others might be fully encrypted internal enterprise chains, others may be partially hidden industry consortium chains, and they can all autonomously be transacting with each other.”
Not only does this mean that those private blockchains that are being developed for the finance industry does not necessarily mean fragmentation, but that other digital currencies could be more easily used in conjunction with each other, and this is especially useful in exchanges or banks. Indeed, this level of blockchain cooperation could see a rise in alternative digital currencies, using different cryptocurrencies for specific needs, for instance, Ethereum when smart contracts are required, switching to alternatives for increased anonymity later in the transaction chain.
Bitcoin itself presents significant technological challenges to work with the system, but in this early stage of the project, a seamless cryptocurrency network with a choice of tokens could become reality.