- Swift and Chainlink collaborate to solve blockchain interoperability.
- The interoperability experiments formed part of Swift’s global strategy to integrate emerging technology with its existing infrastructure.
- Blockchain interoperability remains a challenging problem to solve.
Fully interoperable blockchains remain an elusive “holy grail” for developers due to technical limitations and the lack of standardization within the cryptosphere. However, Swift in conjunction with Chainlink, is attempting to bridge this divide through a series of digital experiments involving the movement of tokenized assets across various public and private blockchains.
Swift and Chainlink Team Up
Global financial messaging service Swift acknowledged the industry’s interoperability challenges, citing varying functionality between chains and different liquidity profiles as major sticking points.
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Even so, the company clarified that solving the interoperability conundrum “is crucial,” particularly considering the efficiencies and wealth-generating potential resulting from working out this puzzle.
“While tokenisation is in its infancy, 97% of institutional investors believe it will revolutionise asset management and be a positive force in the industry, not least because of its potential to increase efficiency, reduce costs and, by enabling fractional ownership, open up opportunities to more investors”. Wrote Swift.
To that end, Swift, Chainlink, and several major financial institutions successfully demonstrated providing “a single point of access to multiple networks using existing, secure infrastructure,” including support for tokenized assets.
Swift stated that the experiments were part of its global interoperability strategy to incorporate emerging technology with its existing infrastructure. The company anticipates using this technology to support central bank digital currencies (CBDCs) and other digital asset payment systems.
Although Swift and Chainlink, along with other projects in the industry, seek to address the issue, blockchain interoperability remains a complicated challenge to overcome.
Interoperability Remains Challenging
The interoperability challenge has long affected a variety of blockchain networks regardless of their nature and mechanism. Major blockchains still struggle to effectively communicate with other ecosystems without relying on third-party solutions like bridges and oracles.
The sheer number of cryptocurrencies adds to the complexity, with the latest count from CoinMarketCap putting the figure at over 1.8 million unique projects.
Chainlink pointed out that blockchain diversity is a natural result of “expressive design” that is shaped by developers prioritizing and optimizing for particular feature sets. In turn, this practice has led to trade-offs being made against other features as a matter of course.
“For instance, some blockchains focus more on decentralization and censorship resistance than throughput and composability at the base layer while other blockchains opt to build in native privacy functionality at the expense of new security assumptions in trusted hardware.” Wrote Chainlink.
On the Flipside
- Efforts to solve interoperability have been largely concentrated within singular ecosystems, such as Cosmo’s, or via “clunky solutions” such as wrapped assets.
- Based on current solutions, bridging blockchains introduces security and operational risks that have yet to be fully solved at scale.
Why This Matters
The rollout of a universal cross-chain bridge solution would be a momentous breakthrough for the industry, enabling frictionless interoperability across every blockchain.
Discover how Chainlink innovations address interoperability and security concerns here:
How Chainlink’s CCIP Tackles Cross-Chain Security Concerns
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