Blockchain Interoperability and The Future of Finance
While there are many innovative blockchain-based projects and services in existence today, the fledgling industry has yet to achieve a sliver of its full potential. This is because these novel solutions are often inaccessible outside of their own particular blockchain-based ecosystem. It is this “siloed” approach for these decentralized technologies that is preventing the creation of unified standards and governance rules. In order to build a sustainable future it is imperative that ‘blockchain interoperability’, the ability of different blockchains to communicate and exchange data with one another, is firmly established.
Bridging the Challenge
Incorporating interoperability into different blockchain ecosystems is a lot more challenging than it may seem at first. Developers have to agree to build a new standard, allowing for a “bridge” to other networks to exist. Several industry segments can benefit from this approach, including supply chains, trade finance and healthcare.
For blockchain technology to be embraced on a broader scale, the world needs a unified solution. No individual chain is capable of meeting the needs of a broad base of industries. Instead, multiple networks need to exist, but they must allow for interoperability across the board.
Indeed, the World Economic Forum [WEF] has felt a need to voice its opinion on the current state of blockchain. The WEF report published in April 2020 highlighted the potential of an inclusive deployment of blockchain within the supply chain industry. It advocates that industry looks for solutions that enable collaboration.
RSK – transparent finance
This is a challenge that RSK, a Bitcoin sidechain and a smart contract platform, is eager to find a solution to. Just as traditional finance adopted ‘Open Banking’, RSK is starting a movement that aims to allow true interoperability, in a term coined ‘Open Finance’.
The team at RSK is convinced that Bitcoin is the greatest decentralized finance opportunity the world has seen to date. All of Bitcoin’s decentralized finance (or DeFi) activity is enabled on RSK, allowing users to lend, borrow, trade, and earn interest on their BTC balances.
With $11.05 billion in total value locked already, DeFi on Bitcoin is a market that cannot be ignored. Over a dozen projects exist already, all of which offer different functionality. More importantly, DeFi on Bitcoin is supported by multiple wallet providers, including Ledger, Trezor, Edge, and many more.
RSK strongly believes that Open Finance is the next logical step in the evolution of decentralized finance, and therefore aims to bring trustless and transparent Bitcoin finance solutions to millions of Bitcoin enthusiasts worldwide. As one of very few platforms currently leveraging Bitcoin technology for smart contract capabilities, RSK has succeeded in achieving interoperability with Ethereum via its token bridge. This bridge lets users cross RSK- and Ethereum-based digital assets across the two protocols. All of this happens through a smart contract locking the original token and minting a “counterpart’ on the corresponding chain.
This RSK ETH Token Bridge creates an opportunity for cross-chain events. Token holders can use their value on their preferred chain without having to contend with restrictions. Additionally, this bridge also increases the potential of layer-two solutions.