When I got into crypto, I succumbed to the contest between blockchain ecosystems, thinking one had to be “better” than the others. I have since realized that the future of cryptocurrency will bring a variety of platforms that excel at different things. With the Inter-Blockchain Communication Protocol (IBC)I left behind the days when the chains of thought to compete and embrace a connected cross-channel future. Let me explain.
Solana, Polkadot, etc. — what do they have in common? They are individual state machines, each trying to achieve something that only one has done before: creating a sustainable and robust ecosystem of developers, investors and, above all, users.
So far, Ethereum shows no signs of slowing down. Since the beginning of summer 2020 with an 8% share of the total crypto market, Ether (ETH) has since captured nearly 20% of the market and stayed there.
There’s a reason why the first sentence of many pitches layer 1 solutions includes the term “Ethereum Killer”. It’s the Moby Dick of crypto – the king of liquidity. And so, many projects are taking up the challenge to improve Ethereum, to “build it better”. Unfortunately, the first thing is often a “bridge”. Bridges have exposed users to many risks and resulted in a large number of problems. However, most people are blissfully unaware that they are exposed to exploits during the bridging process and throughout the lifetime of holding the bridged assets. Most are also unaware that they hold nothing more than an IOU.
The original token that represents everything they purchased is on its original string. During this time, they exchange the equivalent of a piece of paper.
There are obviously exceptions to the rule. At most, good bridges can reduce risk, but the baseline remains the same. Bridges range from centralized to “semi-centralized,” and there’s one thing they can never do: move an asset to a new chain. Why? Because the two individual networks between which the blockchain assets are linked have absolutely no way of communicating with each other. They speak different languages because most channels were never designed to communicate with each other.
The existence of bridges is a symptom of a “me versus you” mentality, where chains try to obtain liquidity from each other.
The four most expensive decentralized finance hacks in 2022 were all bridge exploits: Ronin, the BNB Smart Chain Bridge, Wormhole, and Nomad. Together, users lost over $2 billion. This is roughly the same amount that users lost following the collapse of FTX.
So what if we change the “me versus you” mentality to “us versus centralization”? What if we could get together and decide on communication standards?
While this may not sound radical to some, this is new to crypto. This new system has a name: the Inter-Blockchain Communication Protocol, or IBC.
IBC is a standard for messaging and interaction between different blockchains at the protocol level. It is the product of years of working on the idea that different blockchains should retain their sovereignty.
Allowing users to move freely between various blockchains creates greater capital efficiency and faster innovation. In a way, this reflects a pure capitalist system in which money finds its way to the preferred destination more easily, more surely and more quickly. You can compare it to the Schengen area in philosophy.
While IBC is currently a product that only exists in Cosmos, teams like Composable Finance and PolymerDAO are working to bring it to Kusama, Polkadot, Near and more in the future.
Is the IBC perfect? Of course not. He’s only a year old. But its existence is priceless as it shows what the future of crypto could look like. With IBC, it is possible to go beyond ecosystem wars to create an interoperable and fluid network of different solutions to face a common challenge: to build a permission-free and detention-free future for all.
IBC is a glimpse into the future of blockchains where ecosystems complement each other and allow users to try frictionless “competitors” so users can decide which products they want to use without restrictions.
We can go beyond the playground fights of trying to destroy each other’s sand castles. Instead, let’s use our shovels to build safe roads together.
Valentin Pletnev is the co-founder and CEO of Quasar Finance. At 23, he has gained experience in various fields focused on blockchain and emerging technologies. He was accepted to Draper University in 2018.
This article is for general informational purposes and is not intended to be and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.