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How do cross-chain transaction networks work?
Blockchain technology was initially thought to be an all-in-one solution, where all the transactions would take place on a single chain. However, this idea was deemed impractical with time due to certain limitations and constraints arising within the system scalability area.
If blockchains are to live up to the expectations, then the blockchain technology should allow atomic transactions over various blockchains that are interconnected. A single blockchain may even be split into multiple chains that cooperate.
The concept of cross chains is understood as the ability of two operating blockchains to exchange information with each other in order to form a network to process transactions. Cross-chain transaction networks allow multiple blockchains to pass over information to one another.
The use of blockchain platforms like Bitcoin, Ethereum, and Ripple has highlighted scalability issues over time. These limitations in the present blockchain technology have hindered its full potentials and benefits. Exactly where cross-chain technology comes in to resolve such scalability constraints faced by blockchain technology.
Cross blockchain compatibility
The cross-blockchain compatibility issue arises whenever we talk about multiple blockchains. Incompatibility is because not all of the blockchains use similar protocols. Each blockchain system communicates according to its standards.
The lack of a standardized protocol of intercommunication between the blockchain networks cripples the blockchain technology’s scalability, here comes in cross-blockchain compatibility. The concept allows blockchains to communicate without any need of intermediaries. In this way, blockchains can perform transactions over a cross-chain network.
The cross-platform compatibility will allow businesses to communicate with their clients or exchange information over different blockchains, given that the blockchains are compatible.
Utilizing open protocols on the cross-chain allows the development of standardized connections, enabling multiple blockchains to interconnect easily. Various cases are available that allow the exchange of cryptocurrencies without the use of any centralized intermediaries. This way, the system will perform as a decentralized cross-chain. The cross-chain allows a mutual connection to be established between varying blockchains like those of Bitcoin and Ethereum.
Multi-chain frameworks
Multi-chain frameworks are the next evolutionary step in the cross-chain arena that operates as open environments. More complex than open protocols, multi-chain frameworks establish open communication allowing users to transfer data and values between varying blockchains. The framework allows different blockchains to plug into the environment and be part of a standardized system that operates as a network.
The application of cross-chain technology is imperative for the appropriate adoption of blockchain technology. The use of these networks will also widen the scope of cryptocurrencies.
Similar to the concept of the Internet of Things (IoT), these frameworks are referred to as the Internet of Blockchains (IoB) due to their rather unique capabilities of enhancing blockchain interoperability.
A more efficient system
The concept of blockchain interoperability looks towards enhancing the efficiency of the system and removing any overhead costs. Using smart contracts will allow the system to operate without the need for any intermediaries.
The blockchain interoperability solutions will provide enhanced protection and lower transaction costs.
Solana price has been struggling to break above the key resistance level of $21.10 over the past few days. Earlier in August, the digital asset encountered a strong rejection at the crucial resistance level of $25.45, curtailing gains above the fashionable level of $30. Even so, the smart contract token is among the best-performing cryptocurrencies so far this year, with a 102.61% jump in its year-to-date price. SOL’s total market cap has climbed by more than 5% over the last day to $8 billion, while the total volume of the asset traded over the same period increased by 40%.
Brighter Future Ahead?
Solana price faced significant challenges in 2022, including a 93% decline in its total market capitalization and a 96% drop in its total value locked (TVL). However, the SOL network has posted significant resilience in 2023, defying general market movements. Priority fees and network upgrades have contributed to a consistent 100% network uptime.
The Solana DeFi ecosystem has also shown significant recovery, with a 41% growth in the TVL. Its liquid staking derivatives have also played a role in the asset’s renaissance. The ecosystem has expanded into other sectors such as NFTs, gaming, and consumer-based applications, driven by technical advancements like state compression.
Notably, Solana recently admitted that the network has been facing difficulties in the decentralized finance (DeFi) sector. Even so, it believes that its new strategy will help it regain its foothold and…
Bitcoin price has been relatively stable over the past few days after volatility picked up during the weekend, pushing the price lower by more than 3%. At the time of writing, the flagship cryptocurrency, Bitcoin, was trading at $26,255.55. As it continues to dominate the crypto market, ranking 1st, its total market capitalization slightly declined over the past day to $5.12 billion. Additionally, the total volume of BTC traded over the same period slumped by more than 32%.
Economic Concerns
Data published on Tuesday showed that the Conference Board Consumer Confidence Index declined in September to 103.0, down from a revised 108.7 in August. This was its lowest level since May 2023 and marked two consecutive months of decline. The Present Situation Index, which measures consumers’ assessment of current business and labor conditions, rose slightly to 147.1 from 146.7.
The Expectations Index, which measures the consumers’ near-term prospects for business, income, and labor market conditions, dipped to 73.7 in September, down from 83.3 in the prior month. The Expectations Index fell below the crucial level of 80, which signals a recession within the next year. Consumer fears of a looming recession also ticked higher in September amid the short-term economic contraction anticipated in the first half of 2024.
Focus will be on Fed Chair Jerome Powell’s speech on Thursday which is likely to add volatility and create a bearish environment for traders. As such,…
Ethereum price has been struggling in recent weeks on the back of its unstable on-chain performance and global economic uncertainty. The general market performance has not helped much either, as most altcoins have failed to hold an upside momentum. Ethereum, one of the most valuable assets in the cryptocurrency market, has dipped by nearly 3% in the past week and more than 5% in the month to date.
Fundamental Analysis
Ethereum price has been on a consistent bearish trajectory over the past few weeks against the backdrop of a dull crypto market and a stronger dollar. The dollar index, which measures the performance of the greenback against six major currencies, has been hovering around its highest level since December 2022 since Thursday. At press time, the dollar index was trading higher at 105.720. A stronger dollar tends to be bearish for risk assets, particularly cryptocurrencies.
Investors have been assessing the economic outlook, considering what could be next for interest rates and the economy, ahead of a string of key economic data due later this week. Investors will be looking at the data from the housing sector, as well as the CB Consumer Confidence data slated for Tuesday. Additionally, the quarterly GDP data for Q2 is expected to be published later Thursday, concurrently with the initial jobless claims.
The Fed’s favorite inflation gauge, the personal consumption expenditure index (PCE), is also expected to be published on Friday. Various…
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