IBC will allow assets to flow between blockchains without the significant level of risk associated with bridging.
When I first got into crypto, I fell victim to the competition amongst blockchain ecosystems, assuming that one had to be “better” than the others. Since then, I’ve learned that the future of bitcoin will offer a range of platforms that will excel at different things. With the Inter-Blockchain Communication Protocol (IBC), I’ve abandoned the notion that chains must compete and instead embrace a connected interchain future. Allow me to explain.
What do Solana, Polkadot, and other names have in common? They are independent state machines, each attempting to do something that no one else has done before: build a sustainable, healthy ecosystem of developers, investors, and, most crucially, consumers.
So far, Ethereum is not slowing down. Subsequently beginning the summer of 2020 with an 8% share of the global crypto market, Ether has since captured and maintained nearly 20% of the market.
There’s a reason why many proposals for layer-1 solutions begin with the phrase “Ethereum Killer.” It’s the Moby Dick of crypto – the king of liquidity. As a result, several projects take up the challenge of improving Ethereum in order to “make it better.” Unfortunately, the first object that comes to mind is frequently a “bridge.” Bridges have exposed users to several dangers and caused numerous issues. However, most people are blissfully ignorant that they are vulnerable to vulnerabilities during the bridging procedure and for the duration that bridged assets are stored. Most are also ignorant that they are in possession of little more than an IOU.
The original token, which represents everything they purchased, is still on its original chain. In the meanwhile, they’re exchanging the equivalent of a piece of paper.
Obviously, there are exceptions to the rule. At best, good bridges can reduce dangers, but the baseline remains unchanged. Bridges can be centralised or “semicentralized,” but they can never physically move an asset to a different chain. Why? Because the two separate networks that the blockchain assets are connected to have no method of communicating with one another. Because most chains were never intended to communicate with one another, they speak different languages.
Bridges are a symptom of a “me vs. you” attitude in which chains compete for each other’s liquidity.
Bridge vulnerabilities were the four most expensive decentralised finance hacks in 2022: Wormhole, Ronin, and Nomad are all BNB Smart Chain bridges. Users collectively lost more than $2 billion. This is roughly the same amount of money that users lost as a result of the FTX crash.
So, instead of “me vs. you,” how about “us vs. centralization”? What if we could all agree on some communication guidelines?
While this may not appear revolutionary to others, it is fresh in the crypto world. The Inter-Blockchain Communication Protocol, or IBC, is the term given to this new system.
IBC is a protocol-level standard for messaging and interacting between multiple blockchains. It is the result of years of work on the concept of different blockchains retaining their sovereignty.
Allowing users to freely move across blockchains increases capital efficiency and speeds up innovation. In other ways, it resembles a pure capitalist system in which money finds its way to the desired destination more easily, safely, and quickly. In theory, it is comparable to the Schengen zone.
While IBC is now only available in Cosmos, projects such as Composable Finance and PolymerDAO are aiming to introduce it to Kusama, Polkadot, Near, and other platforms in the future.
Is IBC flawless? Obviously not. It’s just been a year. However, its presence is priceless because it demonstrates what the future of cryptocurrency could look like. With IBC, we can move beyond ecosystem battles to develop an interoperable, fluid network of diverse solutions to a common challenge: creating a permissionless, noncustodial future for all.
IBC is a glimpse into the future of blockchains, where ecosystems complement each other and allow consumers to try out “competitors” frictionlessly, allowing users to freely choose which goods they wish to use.
We can progress beyond playground brawls over destroying each other’s sandcastles. Instead, let us utilise our shovels to work together to build safe roadways.