Imagine if you could only send texts or make phone calls to other people who used the same phone network as you; your communication capabilities would be extremely limited. Not only that, but a service that would be able to provide communication across networks would inevitably become one of the most successful in the industry. The cryptocurrency and NFT markets are experiencing this same problem of segmentation, and it’s severely dampening that amount of usage and liquidity that would be taking place within these asset classes if they were able to move freely across networks.
This mechanism is known as a cross-chain transaction or cross-chain swap, and allows for non-native assets to become interoperable on other blockchains. This will be a major leading force to adoption, as it will make all networks much more congruent with one another, bringing all the best attributes and aspects of each network and application into a single hub.
A cross-chain transaction, known to some as an atomic swap, allows for the straightforward trading of cryptographic assets from two separate blockchains using smart contracts. Essentially, the transactional smart contract gives users access to the other’s coin within a specific time frame, completing the transaction and finalizing the swap once both parties meet the conditions stated with the smart contract. With an example of cryptocurrencies, this could be a transaction such as trading a Bitcoin for the equivalent amount of Ether, and for NFTS, it could be something like exchanging an NBA Top Shot card for a CryptoPunk.
Cross-Chain transactions don’t only appeal to regular investors and collectors looking to broaden the capabilities of the market, but also to the ‘whales’ who may not even be looking to cash out their rare NFTs. For example, if someone owns a multi-million dollar Beeple NFT, they may not want to sell it for its cash equivalent, but would be willing to trade it for an extremely rare CryptoKitty or valuable NFT from another artist or celebrity. With cross-chain trading, the opportunities are borderless and literally endless, opening up every possible trading situation that the market could allow for.
Being blockchain agnostic means that a distributed ledger platform or application is available on all usable blockchains, unleashing its full capabilities as it penetrates all potential user bases. Imagine if specific web browsers could only interact with certain websites; it would be an absolute mess. With interoperable and blockchain agnostic applications, a platform does not have to worry about excluding any potential market stakeholders. Everyone who wants to utilize the platform can easily access it.
We can also apply this concept to cryptographic assets, with NFTs being no exception. The theory is simple in principle and practice, but challenging to execute properly; the more access points to your application, the higher the chance of capturing additional users and network value. With NFTs now accessible on many platforms — Ethereum, Binance Smart Chain, Flow, WAX, Cardano, HECO, and more, giving the native NFTs of each chain the ability to be access in one place brings additional opportunities to all.
Certain isolated chains have millions or billions of dollars of liquidity sitting on top of their networks, just waiting for the right application to come along that will absorb it up by providing unrestricted value. With the rising and continued interest seen within the NFT ecosystem, a multi-chain NFT platform can provide this gateway.