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What is multichain and how is it different from cross-chain?

Hello, we are here with a very important article on financial markets.
فوریه 20, 2023
What is trade journaling? Why should we have trade journaling in the digital currency market?
فوریه 20, 2023

What is multichain and how is it different from cross-chain?

In this post, we mention the two basic concepts of Multichain and cross-chain in the field of blockchain.

Cross-chain and Multichain. These are two terms that you will no doubt be familiar with when interacting with the cryptocurrency ecosystem. But do you know the difference between the two?

Each of these technologies adds something important to the blockchain space. But they do it in different ways. And understanding the functionality and limitations of each is essential for anyone trying to understand the crypto space and its future.

So what exactly do these terms mean? And how do they affect the entire blockchain? We are glad that you have chosen us again.

Before we answer that, we need to talk about something very important in the cryptocurrency industry: interoperability.

What is interoperability?


Interoperability means that different networks and projects can “talk” to each other. It allows users to seamlessly send data and values from one network to another.

However, most blockchains are designed in silos, without the ability to interact with each other. This leads to a huge inefficiency problem and hinders innovation in the space. More importantly, it limits users’ freedom in how they use their digital assets.

Interoperability is essential for decentralized finance


An example of interoperability in traditional finance is the ability to send money from one bank to another. While there are still fees and delays involved, the systems are not isolated and can interact with each other. So having money with a bank doesn’t mean it’s stuck there.

In the digital currency space, we can apply the same analogy to blockchains and platforms instead of banks. Having value (coins) in a particular blockchain does not mean you can transfer that data and value to other networks. Because each one speaks a different language. DeFi, which is mainly based on Ethereum, cannot interact with coins and tokens of other blockchains. This means that these assets have much more limited options when it comes to decentralized financial services. Unless you exchange them for Ethereum based tokens.

What is the result? A relatively centralized DeFi system, dominated by a single main blockchain.

Interoperability is essential to the growth of the metaverse


The rapid development of the metaverse emphasizes the importance of greater interoperability. Let’s say you bought some NFT mods, an avatar or a vehicle on one platform and you want to bring it with you to another metaverse ecosystem. Your platforms, and your assets, all need to be able to communicate with each other to give you this much freedom in how you use your assets.

Alternative? You will be limited to using your digital assets on platforms with the same blockchain. Such limited control over how your assets are used is not true ownership. So while interoperability may sound like a technical term, it’s actually about your digital governance and the ability of the digital space to become something real, like real life.

This is why we need interoperability across networks. So that users have the freedom to explore different digital platforms, be it DeFi or the virtual world, without being locked into one system.

Multi-chain technology and cross-chain technology are two main fields of development that have been applied to overcome this problem. So let’s take a closer look at them and what each one means for you.


Multichain networks


At its heart, a multi-chain blockchain refers to a project that uses multiple chains designed to communicate with each other. To do this, the project must be based on at least two blockchains simultaneously. With the existence of several blockchains, it is possible to easily communicate and interact between blockchains so that users can use the project in different networks.

How does Multichain technology work?


The multi-chain approach creates an Internet of Blockchain that allows users to transact on multiple chains simultaneously without having to transfer their assets from one network to another.

This is achieved by dividing the underlying blockchain itself into different layers: the consensus layer – which keeps the system secure – and the foundation layer for the entire network. This common thread keeps all the different blockchains in the multi-chain system secure.

In contrast, the network application layer, which sits on top of it, is programmable. This allows different blockchains to coexist and communicate freely. jetty despite each being a unique ecosystem


cross-chain technology


Where multi-chain networks refer to projects that exist across networks but share an underlying security infrastructure, a cross-chain protocol enables collaboration between completely unrelated blockchain ecosystems. In other words, as a block bridge It works.

What do we mean by this? The vast majority of DeFi is based on Ethereum, and Bitcoin is like a foreign language. This means that you will need to use an exchange to exchange your Bitcoin to ERC20 to begin with. A costly, inconvenient and time-consuming process that makes you dependent on the exchange.

However, Blockchain Bridge eliminates the need for any third-party intermediaries such as an exchange platform and enables you to use your Bitcoins directly within the Ethereum ecosystem. This not only gives people more control over the direction of cryptocurrencies, but also helps decentralize the entire ecosystem.

How do chain bridges work?


A blockchain bridge acts as the missing link between two blockchain ecosystems, making it relatively easy to transfer information, data, and tokens across them.

This is done by creating a protocol that keeps your core assets in a pool and gives you back coins of equivalent value that – through the power of smart contracts – are compatible with the rest of the network. It provides a way to transfer information, data and assets across different blockchains using these “complex” assets.


Why are blockchain bridges vulnerable?


Blockchain bridges provide a solution to the lack of cooperation between blockchains in the crypto ecosystem. But if we do not mention their negative points, we may face problems later. Bridges are notorious for being vulnerable to hacks. Like the Ronin Network Bridge exploit in March 2022, which proved to be the biggest cryptocurrency hack in history.

The reason for this is simple. Blockchain bridges create a central point of failure by maintaining a set of assets in their protocol.

This is not to say that bridges are useless. It’s just that if they want to continue to be used, they need to move past their current state to be able to overcome these security issues and benefit the space as a whole.

Comparison of multichain and cross-chain


So in summary, mutichain technology creates an internet of blockchains that are able to communicate freely while remaining secure thanks to a common security layer.


The future of blockchain


Breaking down barriers between different blockchains defines the future of this field. And how far this technology can go and grow.

You have the power to make informed decisions as you explore the digital space. Of course, do not neglect to consult with experts. You can share your questions and opinions with us in the comments.