Crypto interoperability evolves: From blockchain bridges to DeFi transfers

If the visitor's blockchain wallet and the restaurant terminal were compatible, the client would not have to remember what crypto they have on balance.

In order for users to pay with ETH in stores that accept BTC, their blockchain systems must be cross-chain interoperable.

To evaluate the progress being made by industry players in this direction, it's important to understand how the concept of interoperability has evolved from the first attempts to bridge the gap between two blockchains to today's cross-chain DeFi transfers.

In the same year, blockchain company Lightning Labs successfully completed an atomic swap between the Bitcoin and Litecoin test networks without registering a transaction on both blockchains.

Notably, these tokens are not native to a particular blockchain and can be created on any distributed ledger protocol.

In 2020, technology companies repeatedly noted the importance of combining the efforts of large blockchain platforms, which, until recently, were created autonomously from one another.

Reflecting on whether cryptocurrencies can achieve the same level of fungibility and user experience as traditional payment systems, Peter Mauric, the head of public affairs at blockchain infrastructure firm Parity Technologies, told Cointelegraph that while the decentralized fintech sector is gaining popularity, digital payment applications are simple to implement on scalable, interoperable, crypto-economic networks: "As distrust between users and the traditional financial systems grows, I predict we will start to see blockchain-based payment, lending, saving and banking apps gain in popularity."

Better scalability with fast latency blockchains is already making things look similar to credit cards in terms of transaction processing times and fees, according to Sandeep Nailwal, co-founder and chief operations officer at blockchain scalability platform Matic Network.

The big steps that have recently been taken to unify the efforts of blockchain systems make it possible to believe that interoperability will soon cease to be a problem for cryptocurrencies.

Ripple is working on the Interledger Protocol that allows for carrying out transactions between blockchain and non-blockchain platforms.