A Hitchhiker’s Guide to the Internet of Blockchains

Posted by Connor Smith on 4/22/19 9:02 AM

What's next for blockchain in 2019? One area of significant development and potential is the internet of blockchains. We’re going to shed some more insight on what the internet of blockchains is, why it matters, and some projects paving the way in this space.

 Don't Panic!

If you’re new to the space you’re probably still wondering how blockchains actually work and a little confused as to why we need an internet of them. If you feel like this describes you, don't fret! I will do my best to try and explain the internet of blockchains as elegantly as possible, but you will definitely want to check out a few other articles first to get some background. If this is your absolute first time reading an article in the space a good place to start is the initial Bitcoin Whitepaper, which can be found here. Another good beginner’s guide to blockchain can be found here. And check out some of our other blog posts here, here, and here if you want to understand some of the benefits of the technology. Now onto the internet of blockchains.


So what exactly is the internet of blockchains? The internet of blockchains refers to the idea of creating an ecosystem in which people can communicate and transact with one another across all of the different blockchain protocols that exist. In essence, the internet of blockchains is the distributed ledger world’s way of trying to tackle the interoperability problems that exist between the myriad of competing protocols. Imagine a world where you could create a smart contract with someone on Tezos and once executed they could transact with someone via the Bitcoin Network in exchange for digital information stored on the Factom blockchain. This is the type of world that the internet of blockchains aims to create. Instead of trying to create ‘fat’ protocols that do everything, projects building the internet of blockchains are connecting networks that are optimized for different uses so that users can transact across them seamlessly. The belief is that connecting all of these different protocols will allow developers to leverage the best aspects of all of them and create more innovative applications that will drive adoption. This way a network participant can transact using his or her favorite protocol while still benefiting from the functionality of others. Just like TCP/IP acts as the backbone of modern web communication by allowing network devices to communicate over the internet, the internet of blockchains will allow this type of cross-chain communication and serve as the foundation for Web 3.0.


While the internet of blockchains’ main promise is solving the interoperability problems of blockchain networks, it also addresses another critical problem that has plagued blockchain networks: scalability. Scalability is arguably the largest factor holding back blockchain from mainstream adoption. Protocols like Bitcion and Ethereum are only capable of handling up to 7 and 15 transactions per second respectively. When compared to the likes of Visa’s 24,000 transactions per second, many are skeptical to how blockchain will reinvent financial services or the internet with such latency. There are quite a few different ways people have started trying to tackle this problem. Some of have created entirely new blockchain networks that are optimized for speed like Qtum. Some have tried to create second-layer, micropayment networks on top of protocols, like The Lightning Network for Bitcoin. Projects creating the internet of blockchains are addressing the problem yet another way.


The internet of blockchains must address two aspects of scalability in order to be successful. The first is vertical scalability, or the internal speed of the protocol. How long does it take for the network to reach agreement on a transaction? A network’s selection of consensus protocol, and how it interfaces with applications built on it affect the internal speed of the network. The other facet that these protocols must tackle is horizontal scalability. Where vertical scalability is concerned with how the protocol processes transactions itself, horizontal scalability refers to how the network architecture is structured between all of the different blockchain protocols that participate. A network can only be optimized internally so much before it reaches the threshold of its potential performance. Projects tackling the internet of blockchains are figuring out how to organize the different blockchain protocols within their ecosystem so that the network can continue to operate at scale. The finer points of how protocols are approaching this are highly technical and could be articles in and of themselves, so I will avoid them here for the sake of brevity, but I do want to highlight two projects moving the needle in this area: Cosmos and Polkadot.


Cosmos is attempting to create the internet of blockchains through its set of open source tools: a modular architecture and application development kit (the Cosmos SDK), Tendermint, and the IBC or inter-blockchain communication protocol. Tendermint is both a consensus engine and byzantine fault tolerant consensus algorithm that allows state machines to be built on top of it in any language, where it then takes care of replicating them. Tendermint essentially packages the consensus and networking layers of blockchain protocols into one generic engine. Developers can now focus on creating applications, in this case, with the Cosmos SDK. The SDK allows developers to launch lightweight, application specific blockchains to which they define the security boundaries. These are essentially separate modules within the cosmos ecosystem that will then be connected through the inter blockchain communication protocol. This creates a network of modular, application specific networks that are all standardized to the same base network and can communicate with one another. Several Tendermint/Cosmos based protocols have been or are being launched soon, including Iris and Terra.


Polkadot is a heterogeneous multi-chain technology comprised of "relay chains", "parachains", and "bridges". Relay chains are responsible for coordinating consensus and transaction delivery between the different blockchain networks they host. Parachains are blockchains connected to relay chains that can be thought of as a type of side-chain used to help gather and process transactions on the network. Bridges are a specialized parachain that serve as the link to the actual blockchain networks within the Polkadot ecosystem (think Ethereum or Bitcoin). Their vision for the network is one main relay chain for the Polkadot ecosystem for which there are a plethora of parachains with varying characteristics connected to it. This helps distribute the transaction volume across the whole network so that a greater number of transactions can be processed at a time while preserving anonymity. Transactions flow across the relay chain through these parachains and between the different protocols that have established a bridge to the Polkadot network. Below you'll see a diagram of the network's chain distribution and you can read more about the network design here.




Both of these projects are highly technical and there are far more pieces involved than the brief summaries I provided above, so if you would like to learn more check out their websites and read their whitepapers (Cosmos, Polkadot). Creating the internet of blockchains is certainly no easy undertaking, but if successful will be a significant piece of the puzzle needed to supernova blockchain into to the transformative technology it has the potential to be. I am excited to see how Cosmos and Polkadot evolve as they are both great projects with amazing teams and communities and a lofty goal. If you found this article useful or have any questions feel free to reach out and follow us on Twitter or Discord! Let us know what other type of content you’re interested in hearing and we will do our best to address it in our coming posts.

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