What Is Cross-Chain Technology?

With the development of blockchain technology, more and more blockchain projects have appeared. Due to the closure property of the blockchain, different blockchains have become islands of value. The information interaction and value transfer problems between different blockchains need to be solved urgently.

The cross-chain technology is essentially a technology that transfers the data D (or information I, or message M) on the A blockchain to the B blockchain safely and credibly, and produces the desired effect on the B chain. Because the blockchain system is originally a special distributed ledger database system, the most common data transferred is asset data, such as token balances.

Ⅰ. Types of Cross-Chain

Cross-chain interaction can be divided into homogeneous chain cross-chain and heterogeneous chain cross-chain according to the different underlying technology platforms of blockchains: the security mechanism, consensus algorithm, network topology, block generation verification logic between homogeneous chains are all Consistent, the cross-chain interaction between them is relatively simple. The cross-chain interaction of heterogeneous chains is relatively complicated. For example, Bitcoin adopts the PoW algorithm and another blockchain adopts the traditional deterministic consensus algorithm. The block composition and certainty guarantee mechanism are very different. Cross-chain interactions between heterogeneous chains generally require third-party auxiliary services to assist cross-chain interactions.

Ⅱ. Mainstream cross-chain mechanism

There are many attempts and developments on cross-chain technology in the past few years, and the major models of cross-chain include Hash lock, notary mechanism, side chain and relay technology,etc.

  1. Notary scheme

The notary mechanism is essentially a way of intermediary. Specifically, assuming that the blockchains A and B themselves cannot directly interoperate, they can introduce a mutually trusted third party as an intermediary, and the mutually trusted intermediary will verify and forward cross-chain messages. The advantage of the notary mechanism is that it can flexibly support various blockchains of different structures (provided that the notary can access the information on the chain of related parties), but the disadvantage is that there is a risk of centralization.

2. Hash-locking

Hash-locking technology mainly supports the exchange of atomic assets in cross-chain, which originated from the Lightning Network of Bitcoin. Its typical implementation is HTLC (Hashed TimeLock Contract). The principle of hash locking is to achieve the atomic exchange of assets through time difference and shadowing the hash value. Hash-locking can only be used for exchange but not for asset or information transfer, so its use scenarios are limited.

3. Sidechains / Relays: A sidechain refers to another blockchain that has the functions of a certain chain. The sidechain can read and verify the information on the main chain. The side chain actively perceives the main chain information and performs corresponding actions. The relay chain is a combination of the side chain and the notary mechanism. The relay chain has the key information needed to access and verify the interoperable chain and transfer the cross-chain messages of the two chains. From this perspective, the relay chain is also a decentralized notary mechanism.

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