So, you now have a basic understanding of blockchain technology and layer 1 protocols. You may be feeling good about going to the bar and discussing the newest layer 1 protocol and its associated native digital asset … then someone responds, well does it have cross-chain compatibility? Response: … of course …??
Cross-Chain Simplified
“Cross-chain” is a reference to two (or multiple) layer 1 protocols communicating with one another in a manner that permits collaboration or interoperability between different blockchain ecosystems. To put it more simply – “cross-chain” technology allows a ledger of one digital asset to transfer from one layer 1 protocol to a second layer 1 protocol so that the individual transacting or using that specific digital asset can explore applications across various layer 1 protocols. 
Still Confused?
To be honest – many are after reading the above. To fully understand the technology, it is important to understand the concept trying to be achieved: the goal of this “cross-chain” technology is to solve the problem of isolated blockchains whereby each layer 1 protocol functions completely independent of others and is not able to interact with different blockchain technologies.
Think of iPhone and Google Pixel. These two devices run on completely separate operating systems (IOS and Android, respectively). Imagine owning an iPhone and not being able to text or call your best friend that has a Google Pixel … that would be incredibly annoying and probably lead you to pressuring your friend to buy an iPhone. While NOT a perfect analogy, this does help provide a highlight of the issue “cross-chain” technology is trying to solve.
Ok, But What Are the Blockchain Benefits?
Easy – scalability, security, diversity of asset functionality and general technology development. The most IMPORTANT benefit, however, is removing the need for third-party custodians (or centralized exchanges) to support the transferring of digital assets supported by different layer 1 protocols. The success of many blockchain based projects is premised on decentralization. In order to be completely decentralized, the blockchain ecosystem cannot be fragmented into separate independent technologies that need a centralized location controlled by a third-party to direct communications (or transfers) between different layer 1 protocols. “Cross-chain” technology can (on its own) facilitate interoperability between different layer 1 protocols and, thus, serve a fundamental pillar to creating a truly decentralized blockchain ecosystem.
Is this All Made Up?
No – it is, in fact, real. A great example of “cross-chain” technology is OpenOcean, which is – at a high level – a “cross-chain” decentralized exchange aggregator that permits digital asset (or crypto) swaps across various blockchain technologies.
At Layer 1, we aim to distribute blockchain knowledge and concepts in hopes to further educate those interested in enhancing their understanding of this new and exciting technology. Some of the best blockchain based ideas derive from individuals who take a new interest in the technology and immediately see how it can apply value within a concept already underway … which, in some cases, can lead to awesome innovation.
Post Date: September 13, 2023