If you're into blockchain and have been for a while, you might have heard of “networks of decentralized ledgers.”
You might’ve not researched them thoroughly as the technical complexity of the subject might have scared you off.
But what you shouldn’t have done, however, is overlook the concept's significance.
There is currently a number of projects in the blockchain space that are aiming to introduce multi-chain and multi-protocol communication.
A need for this existed for years, but it’s only now that startups such as Cosmos and Polkadot seem to have a real shot at bringing decentralized networks together. In this article, we’ll discuss the ways they are planning to go about it.
What’s wrong with having one blockchain?
Back in 2014, when people were particularly excited about Ethereum’s then-new Turing completeness, the platform was widely perceived as the all-encompassing blockchain that would take care of it all: transactions, smart contracts, and decentralized applications.
Then the infamous DAO attack happened and one of Ethereum’s weaknesses - the possibility of the network’s basic failing in terms of governance - was vividly exposed. The blockchain maximalists stopped rambling at once.
Besides that, the network’s “guidelines” restricted developers. One couldn’t alter rules, implement changes, and test them out quickly on Ethereum - there was always the need to maintain consensus. And such an environment, many agreed, was not conducive to innovation.
Having a multitude of blockchains, on the other hand, which could all serve different purposes, was suddenly considered beneficial. And the only thing lacking, the industry leaders felt, was the functionality to make blockchain networks interoperable.
So, what is an “Internet of Blockchains”?
Let’s start with Cosmos - out of the two technologies we are going to describe here, its internet of blockchains concept is, in our opinion, much easier to comprehend.
As you might have figured out, the project wants to launch an entire network of interoperable blockchains. This network will consist of:
Zones - Proof of Stake blockchains based on Tendermint - the general purpose blockchain engine which, too, was created by Cosmos’ developers.
The hub - A blockchain that coordinates efficiently the communication and interaction between zones.
Initially, there will only be one hub. But the tech is open-source (under the APACHE2 license) so new hubs, with multiple zones plugged into them, will surely occur in the future.
Cosmos’s native tokens are called Atoms. They will grant rights to those who stake them (allow them to write to the network’s history). To those who don’t - they will give license to vote or to share the bond with other validators and thus earn a reward later.
Also, Atom tokens will be used to pay transaction fees on Cosmos, sort of like Ether coins are used on Ethereum.
To ensure efficiency and speediness on Cosmos, there will just be a 100 people writing to its history at first. As the technology advances, however, the number of validators is expected to grow too.
According to the project’s white paper, the network will reach out to (and interact with) existing chains such Bitcoin and Ethereum, too, through so-called bridges.
The Cosmos developers’ ambition is to encourage those enthusiastic about building interesting blockchain tech by giving them space to experiment and providing them with a standardized way to manufacture individual blockchains quickly. These chains, all connected to the Cosmos hub, won’t have to sacrifice sovereignty. They’ll be able to talk to one another and therefore scale together.
It’s still early days, but the idea really does seem promising.
Now, let’s talk about Polkadot - the project that is, in many ways, similar to Cosmos, but with a few distinctive features.
The first thing worth mentioning is its original terminology:
Sub-chains, which are called Zones on Cosmos, are referred to as Parachains on Polkadot. The blockchain that glues sub-chains together (similarly to the Hub on Cosmos) is named the Relayer chain.
Polkadot’s native token is called Dot. And since the network, just as Cosmos, will operate on the Proof of Stake consensus model, a bunch of Dot tokens will have to be deposited by validators before they are given any validating rights.
One of the main differences between Cosmos and Polkadot is how the projects approach sovereignty. The prior, as we’ve mentioned, will give their sub-chains complete autonomy in terms of maintaining consensus, while the latter will require every Parachain to be plugged into the Polkadot security model.
There’s an argument to be made for both of these approaches: Cosmos will allow for more flexibility, for sure, but Polkadot, with its pooled security, will permit developers to focus on building functionality and not worry about protecting the network.
Another advantage Polkadot is seeking to provide, and Cosmos isn’t, is the ability to transfer data. It aims to enable smart contracts on different chains to interact and call functions of one another without third-party involvement.
The technology, too, will allow reaching out to Ethereum, Bitcoin, etc. through Parachain bridges.
There will be four roles for actors on the Polkadot network: Validators, Collators, Nominators, and Fishermen.
Validators will ensure security on the network; they will commit blocks to the blockchains’ history.
Nominators, or those holding Dots but refusing to stake them, will delegate their bonds to Validators (and get rewards for that afterward).
Collators will function similarly to full nodes on Bitcoin; they will gather transactions from various Parachains and group them into proof of validity blocks which they will then submit to Validators.
Fishermen will try to spot bad actors on Polkadot and have them weeded out from the network.
We can’t tell for certain which project will be more successful or how the advent and adoption of “networks of blockchains” will affect the blockchain world in general. The experts’ forecasts tend to be extremely optimistic but, since it’s still early days, their opinions might change.
What is inspiring, though, is that both Cosmos and Polkadot can eventually work together. Cosmos's Zones can tap into the Polkadot security and consensus model and, if that happens, the projects can, conjointly, stimulate innovation in the blockchain space.
I guess we'll have to wait and see.