𝗙𝗔𝗗𝗢 𝗚𝗼 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀: 𝗔𝗡 𝗨𝗡𝗗𝗘𝗥𝗦𝗧𝗔𝗡𝗗𝗜𝗡𝗚 𝗢𝗙 𝗖𝗥𝗢𝗦𝗦-𝗖𝗛𝗔𝗜𝗡 & 𝗠𝗨𝗟𝗧𝗜-𝗖𝗛𝗔𝗜𝗡 𝗜𝗡 𝗧𝗛𝗘 𝗕𝗟𝗢𝗖𝗞𝗖𝗛𝗔𝗜𝗡 𝗘𝗖𝗢𝗦𝗬𝗦𝗧𝗘𝗠

When there are various types of blockchain and cryptocurrency working individually, “cross-chain & multi-chain” is known as a future solution for connecting all of them. At “BUIDL Vietnam 2022” conference, many entrepreneurs are developing “cross-chain & multichain” technology (Connext, Astar Network, SotaTek…) and considering it as the future solution to solving blockchain problems. Since it is a new blockchain-based concept, not many researchers are discussing it. Therefore, this article will briefly explain the “cross-chain & multichain”, as well as the advantage of creating “cross-chain & multichain” technology in the blockchain ecosystem.

Before taking a deep consideration of the “multi chain & cross-chain” platform, we need to define what “blockchain” is and how it works.

Blockchain

A blockchain is a “digital database or ledger” containing blocks of connected information that are difficult to be hacked or changed (Hayes, 2022). Data and transactions are filled into a block and then each block is linked together via a structure called “cryptography”. When a new transaction is added to a new block, it will be chained to a previous block and duplicated to another participant’s ledger. Thus, it is difficult for its information to be hacked, altered, or deleted. An early common form of blockchain is “cryptocurrency”. When a digital coin is transferred to another user, its transaction is added to the sender’s and receiver’s accounts simultaneously.

Blockchain is a “decentralized system” in which data is stored in distributed ledgers and cannot be changed or managed by any individuals or organizations.

In the crypto industry, each digital currency is operated with an individual blockchain ecosystem. Hence, cross-chain/ Multichain is considered a new bridge connecting different blockchain ecosystems. Although “Cross-chain” and “Multichain” share the same purpose, they have different approaches to achieving their objectives.

Multi-chain

“Multi-chain” refers to technology in which a blockchain project is required to be active on at least two different blockchains simultaneously. This makes it simpler for various blockchains to communicate. Because it exists on many blockchains, users can use the project on various networks thanks to the simplicity of communication and interaction across the blockchains. A “cross-chain” protocol, which is part of “multichain” technology, is created to transfer assets across the blockchain platforms.

Cross-chain

Cross-chain is simply understood as an interoperability protocol that helps users to transfer assets among many different structured blockchain platforms. They allow crypto traders to flow tokens between blockchain networks without needing a central exchange or conversion steps. These bridges serve as a means of movement across the blockchain ecosystem. By developing a system that keeps your original assets in a pool and gives you back coins of an equivalent value that are compatible with the other network, smart contracts are used to establish this. By leveraging these “wrapped” assets, it is possible to transmit information, data, and assets easily between several blockchains.

Advantages and Limitations of “Multichain & Cross-chain” technology in the Crypto Industry

Advantages

The “multi-chain & cross-chain” technology helps to solve the problem by turning complex and fragmented individual Blockchains into a collection of chains that can operate seamlessly and without interruption. In addition, users can access the smaller ecosystem which has not been implemented (Insurance, Index token…). Therefore, Blockchain developers can easily reach a very high number of new users from other blockchain ecosystems by solving the disadvantages of congestion, low throughput… and taking benefits from other blockchain ecosystems (Lower transaction fees, faster speed…) to optimize for users.

Limitations

Despite the advantage of allowing blockchain users to exchange and interact freely and globally, the technology of building a “multichain & cross-chain” system is complicated. Projects will take a lot of time to research and adjust when implementing on a new ecosystem since each ecosystem has its characteristics (such as programming languages, toolkits…). Maintaining and ensuring the project’s activities on other blockchains evenly and effectively to attract users is also an issue to consider. One core controversial issue that prevents “multi-chain & cross-chain” technology to be implemented widely is security. Users in the cryptocurrency field are extremely concerned about the multichain & cross-chain security vulnerabilities. However, it is stated that “multichain” technology is more secure than “cross-chain” technology since it adopts underlying secure layers whereas “cross-chain” uses smart contracts to communicate with other blockchains.

Although “multi-chain & cross-chain” technologies share the same goals connecting unrelated blockchains, the approaches of both technologies are slightly different. “Multichain” means a project is operated in at least two blockchain platforms while “cross-chain” is a bridge used to transfer crypto across blockchain ecosystems. Since they are newly created, there are many disadvantages such as security, complexity… that need to be improved. However, many developers believe that “multi-chain & cross-chain” is the future of blockchain and its obstacles can be limited soon.

FADO Go is also developing a similar blockchain product in which users can trade FADO Tokens for other cryptocurrencies or rewards when shopping on FADO Go E-commerce platform.

Source: Opeyemi, Becky Leighton, BHO Network