This New Tech Will Transform Crypto in 2024

The cryptocurrency market is on the verge of a transformative year in 2024. In fact, the industry is set for significant changes with the emergence of new technologies.

These advancements promise to improve the functionality and utility of digital currencies and address some of the most pressing challenges facing today's market.

The promise of interoperability

A fundamental development in blockchain technology is the advancement of interoperability protocols. Kadan Stadelmann, CTO of Komodo Blockchain, spoke to BeInCrypto about the critical compatibility between blockchains.

“Blockchain interoperability allows different blockchain networks to communicate, share data and collaborate. It is the glue that unites various blockchain ecosystems, as well as their respective cryptocurrencies. non-fungible tokens and decentralized applications,” said Stadelmann.

This advancement allows different blockchain ecosystems to connect seamlessly, facilitating a more cohesive and efficient crypto environment. As interoperability increases, so does the decentralization of the entire blockchain sector, ushering in a trustless user experience where dependence on centralized exchanges decreases.

Interoperability unites various cryptocurrencies, NFTs, and decentralized applications, heralding the decentralized cross-chain exchanges (DEX) was. These platforms enable the trading of assets across disparate blockchains and the movement of assets from one blockchain to another.

“To date, blockchain solutions have been formed around existing smaller ecosystems for relatively simple use cases. To achieve the promising outcomes of blockchain for global supply chains that intersect multiple ecosystems and utilize multiple blockchain platforms, interoperability is critical,” Deloitte analysts. wrote.

Read more: How to Launch DApps Cross-Chain: A Guide to Interoperability

This innovation therefore aims to address the long-standing issue of liquidity fragmentation in the cryptocurrency market, providing a more streamlined and user-friendly trading experience.

“Developing or leveraging cross-chain solutions can pioneer dApps that operate seamlessly across multiple blockchains. This not only diversifies their user base, but also allows them to leverage various existing ecosystems, presenting unparalleled opportunities for innovation, growth and the development of novel decentralized solutions,” added Stadelmann.

Several initiatives are leading the move toward a more interconnected blockchain environment, each introducing innovative methods and technologies to advance interoperability.

Uniting blockchains

The growth of decentralized finance (DeFi) is a testament to the interoperability and revolutionary potential of blockchain technology. According to Stadelmann, smart contracts and DEXs have become the backbone of DeFi. They offer loans, borrowing and peer-to-peer (P2P) operations without the need for traditional financial intermediaries.

At its core, DeFi democratizes finance, lowers barriers to entry, and fosters financial inclusion and transparency, challenging the foundations of traditional banking and finance.

“DEXs offer a way to trade crypto assets through peer-to-peer networks, automated market maker (AMM) liquidity pools, or hybrid ways that combine P2P and AMM technology. Lending and Borrowing Protocols Facilitate P2P Crypto Lending While Decentralized oracles bridge the gap between on-chain and off-chain data. Together, these solutions give users unprecedented control over their assets,” said Stadelmann.

Read more: A Complete Guide to P2P Decentralized Exchanges (DEX)

As interoperability increases, the entire blockchain sector becomes increasingly decentralized. Interoperability is crucial because it creates a less trustworthy user experience without third-party intermediaries, such as centralized exchanges.

For example, Moles uses an innovative parachain structure that allows multiple blockchains to interconnect and interact within a unified network. This method facilitates interoperability and consolidates security and data exchange between interconnected chains. Therefore, it marks a significant step towards a cohesive blockchain infrastructure.

“Additionally, cross-chain DEXs, like the one built into Komodo Walletallow users to exchange assets across separate blockchains (i.e. BTC and ETH) or join/move assets from one blockchain to another (i.e. convert BEP-20 USDT to PLG-20 USDT),” Stadelmann stated.

Cosmos, on the other hand, uses its Inter-Blockchain Communication (IBC) protocol. It enables direct, trustless transmission of messages and value between autonomous chains. The “Internet of Blockchains” concept introduced by Cosmos emphasizes the critical role of interoperability in realizing the decentralized and scalable network necessary for the success of Web3.

Link of the chain has developed the Cross-Chain Interoperability Protocol (CCIP) to facilitate a standardized, secure and seamless exchange of data and commands between various blockchains. The Chainlink initiative underscores the essential need for secure and reliable data exchange to support the future of interoperable blockchain capabilities.

“Banks now understand that without a way to interoperate with their counterparties' chains and with public chains, they will not be able to be successful in any asset they create. Interoperability is now a strict requirement [also for blockchains]" Link of the chain Co-founder Sergey Nazarov saying.

Improved privacy and security

The integration of zero-knowledge technology into blockchain networks is another important step towards improving privacy and security. Zero knowledge proofs enable validation of transactions without revealing sensitive information, addressing privacy concerns associated with public blockchains.

Ramani Ramachandran, CEO of Router Protocol, told BeInCrypto that zero-knowledge proofs help create secure and private transactions, essential in applications where data sensitivity is paramount. Such an important cryptographic innovation is therefore crucial for use cases that demand confidentiality, making it a cornerstone for future blockchain applications.

"The adoption of zero-knowledge proofs is an important step towards achieving a balance between transparency and privacy in blockchain networks, making them more suitable for a wider range of applications, including those that require strict data protection," he explained. Ramachandran.

Likewise, Vitalik Buterin, co-founder of Ethereum, believe on the use of privacy groups as a mechanism to improve confidentiality in financial transactions. This approach uses zero-knowledge proofs to allow individuals to certify their separation from any funds associated with illegal activities.

“The next logical advance in the quest for greater cryptographic privacy involved the introduction of general-purpose zero-knowledge proofs, such as those used in blockchains like Zcash and on-chain smart contract systems like Tornado Cash. Such systems allow the anonymity set of each transaction to potentially be equal to the complete set of all previous transactions,” Buterin wrote.

Buterin highlighted that solutions based on zero-knowledge proofs are expected to see substantial growth over the next year. This increase is expected as global regulations change and people increasingly prioritize safeguarding their privacy.

Read more: On-chain and off-chain privacy in Web3: explanations for the differences

Still, Stadelmann emphasized that the industry remains vulnerable to other threats and “new obstacles that may not exist today.” These include quantum computing, advances in artificial intelligence and environmental concerns, which pose significant obstacles. But Ramachandran also highlighted the regulatory uncertainty risks.

“Regulation is about the only thing I see inhibiting the growth and adoption of blockchain technology. The technology is here, the developers and interest are here, we just don't have a rule book in place. This makes users, entrepreneurs and potential investors skeptical and cautious when it comes to getting involved, considering it an excessive risk,” concluded Ramachandran.

Staying informed and engaged with the latest developments and regulatory developments is essential. Especially for overcoming these obstacles and capitalizing on the transformative potential of blockchain technology. Stadelmann advised entrepreneurs to get involved in the blockchain community, participate in regulatory dialogues and support technological innovations to proactively address any challenges.