Altcoins have been a bit of a plague in the digital currency industry throughout the years, as various developers feel the need to do their own thing when Bitcoin doesn’t offer a specific feature. As a result of that approach, there are a few thousand different forms of digital currency in existence, and most of those are no longer maintained or developed. Wouldn’t it be better if all of these currencies could talk to one another without the need to create even more digital currencies?
The Interledger Protocol Opens Up Interesting Opportunities
Let’s assume for a moment that every blockchain of every digital currency in existence could communicate with one another. While we have that picture in mind, add the prospect of sending funds to other currencies without any hassle. Sounds good in theory, right? It might become a reality in the near future.
If the interledger protocol came to fruition, one global network for all digital currencies in existence would be created. Also, this project would create a direct connection between all companies and individuals using any type of service based on any blockchain. Some people would refer to this idea as creating global standards for payments.
The topic of private blockchains has been kicked around in the Bitcoin community quite a few times. Even though financial institutions show a keen interest in blockchain technology, community members are worried they will create a private version of the public ledger, which would defeat the entire purpose of this technology.
As one would come to expect from such a concept, there will be a third-party involved in the process. Connecting two different ledgers to each other is not all that difficult, but when it comes to exchanging value, someone or something will have to validate the transactions. However, the individual ledgers don’t need to trust the third-party validator per se.
This type of operation can be completed by using cryptographic algorithms, allowing for the creation of an escrow service to hold the funds. No details would be observed by the third party directly, allowing the interledger protocol to work between any ledger system in existence today, and in the future.
Who Will Adopt This Technology?
One of the major concerns regarding the interledger protocol comes in the form of who will adopt the technology. While there are clear advantages to having every different ledger talk to a different one, banks may still favor the option of creating their private blockchain in the long run.
However, the interledger protocol is gaining a lot of interest from major parties, such as Microsoft and even the World Wide Web Consortium.But at the same time, the entire interledger protocol seems to be aimed at disruption the financial sector, and established players in that industry are less likely to embrace this solution.
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