Interoperability refers to the property that allows the unrestricted sharing of resources between different systems.
Understanding the term
Interoperability is the basic ability of computerized systems to connect and communicate with one another, even if they have different manufacturers. In the context of cryptocurrencies, interoperability allows blockchains to be compatible with other blockchains and build upon each other’s use cases and features.
In the current cryptocurrency market, there are several decentralized cross-chain bridges that allow the transfer of data and assets between different blockchains such as Ethereum, Bitcoin, EOS, and Binance Smart Chain. Interoperability is mainly used for the transmission of a specified cryptocurrency’s liquidity from one blockchain to another. It also facilitates the trading of one asset on one chain for another asset on another chain.
Interoperability also allows users to borrow assets on one chain by posting tokens or NFTs as collateral on another chain. It allows for the creation and development of new products and services that leverage the features of multiple blockchains together. Cross-chain technology is one of the most effective solutions that leverage interoperability.
Interoperability for blockchains is defined as the ability to see, access, and share information across different blockchain networks. It has been implemented by a number of blockchain projects as it makes their process easier and more transparent.