2 Technologies Reshaping the Crypto Market in 2024

The crypto market stands on the brink of 2024, a year of change. Indeed, the industry is poised for significant change as new technologies emerge.

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

The hope of cooperation

A major development in blockchain technology is the development of functional protocols. Kadan Stadelman, Chief Technology Officer at Comodo Blockchain, spoke to BeenCrypto about the critical compatibility between blockchains.

“Blockchain interoperability empowers different blockchain networks to communicate, share information, and collaborate. It's the glue that connects different blockchain ecosystems as well as their respective cryptocurrencies, intangible tokens, and decentralized applications,” Stadelman said.

This breakthrough allows different blockchain ecosystems to connect seamlessly, facilitating a more integrated and efficient crypto environment. As functionality increases, the entire blockchain sector will become more decentralized, leading to a trustless user experience that reduces reliance on centralized exchanges.

Interoperability connects various cryptocurrencies, NFTs and decentralized applications together, heralding the era of on-chain decentralized exchanges (DEXes). These platforms allow trading across different blockchains and assets from one blockchain to another.

“Blockchain solutions are currently built around small ecosystems that are relatively easy to use. For global supply chains that connect to multiple ecosystems and use multiple blockchain platforms, collaboration is critical to realizing blockchain's promising results,” Deloitte analysts wrote.

Read more: How to start Cross-Chain Dapps: Communication Guide

Therefore, this innovation aims to solve the long-standing problem of liquidity fragmentation in the crypto market, providing more streamlined and user-friendly trading.

“Developing or using cross-chain solutions will enable dApps to seamlessly pioneer across multiple blockchains. This will not only expand their user base, but also allow them to tap into various existing ecosystems, providing unparalleled opportunities for innovation, growth and development of new decentralized solutions,” added Stadelman.

Several initiatives are leading the charge towards a more connected blockchain environment, each introducing innovative methods and technologies to enable interoperability.

Linking Blockchains Together.

The development of decentralized finance (DeFi) is a testament to the interoperability and revolutionary potential of blockchain technology. According to Stadelman, smart contracts and DEXes have become the backbone of DeFi. They offer peer-to-peer (P2P) lending, borrowing and trading without the need for traditional financial intermediaries.

In essence, Diffie democratizes finance, lowers barriers to entry and increases financial inclusion and transparency, challenging traditional banking and finance foundations.

“DEXes provide a way to trade crypto assets through peer-to-peer networks, automated market maker (AMM) liquidity pools, or hybrid forms that combine both P2P and AMM technology. Lending and borrowing protocols facilitate P2P crypto lending with decentralized oracles that discriminate between on-chain and off-chain data. Collectively, these solutions empower users to gain unprecedented control over their assets,” confirmed Stadelman.

Read more: The Complete Guide to P2P Decentralized Exchanges (DEXs).

As interoperability increases, the entire blockchain sector will become increasingly decentralized. Interoperability is critical because it creates a more trustless user experience without third-party intermediaries such as centralized exchanges.

For example, Polkadot uses a new parachain structure that allows multiple blockchains to connect and interact in a unified network. This mechanism facilitates interoperability and strengthens security and data sharing between connected chains. Therefore, it is an important step towards an integrated blockchain infrastructure.

“Furthermore, cross-chain DEXes, such as the one built into Komodo Wallet, allow users to trade assets on different blockchains (i.e. BTC and ETH) or bridge/move assets from one blockchain to another (i.e. convert BEP-20 USDT to PLG. -20 USDT),” he said. Stadelman confirmed.

Cosmos, on the other hand, uses the Inter-Blockchain Communication (IBC) protocol. It enables direct and trustless messaging and value transfer between autonomous chains. The concept of the “Blockchain Internet” proposed by Kosmos emphasizes the critical role of interdependence in realizing the decentralized and scalable network necessary for Web3's success.

ChainLink has developed the Cross-Chain Interoperability Protocol (CCIP) to facilitate standard, secure and smooth data exchange across different blockchains. The Chainlink initiative highlights the importance of secure and reliable data exchange to support blockchain's interoperability capabilities.

“Banks now understand that if they don't have a way to collaborate with their peer chain and the public chain, they can't be successful with whatever wealth they create. Collaboration is now a tough requirement.” [also for blockchains]said Sergey Nazarov, co-founder of Chainlink.

Improve privacy and security

Integrating zero-knowledge technology into blockchain networks is another big step toward improving privacy and security. Zero-knowledge proofs allow transactions to be verified without revealing confidential information, without revealing the privacy issues associated with public blockchains.

Ramani Ramachandran, CEO of Router Protocol, told BeEncrypto that zero-knowledge authentications contribute to creating secure and private transactions, in applications where data sensitivity is critical. Therefore, this kind of important cryptographic innovation is critical for issues requiring confidentiality, making it a cornerstone of future blockchain applications.

“Adopting zero-knowledge proofs is a major step toward achieving a balance between transparency and privacy in blockchain networks, making them more suitable for many applications, including those that require strict data protection,” Ramachandran explained.

Likewise, Vitalik Buterin, the founder of Ethereum, believes in privacy pools as a way to increase privacy in financial transactions. This approach uses zero-knowledge proofs to enable individuals to verify that they have parted with any funds associated with illegal activities.

“The next logical development to achieve cryptographic privacy involves the introduction of general-purpose zero-knowledge proofs used in smart contract systems such as Zcash and on-chain Tornado Cash. In such systems, the anonymity of each transaction can be equal to the entire set of previous transactions,” Buterin wrote. .

Buterin emphasized that solutions based on zero-knowledge authentications expect significant growth in the coming year. This increase is expected as international regulations change and individuals prioritize protecting their privacy.

Read more: On-chain and off-chain privacy in Web 3: Differences explained.

Still, Stedelman stressed that the industry is exposed to other threats and “new barriers that may not exist today.” These include quantum computing, advances in artificial intelligence, and environmental issues that pose significant hurdles. But Ramachandran highlighted the risks of regulatory instability.

“The only thing I see holding back the growth and adoption of blockchain technology is regulation. The technology is here, the developers and the needs are here, we just don't have a set playbook. This makes users, entrepreneurs and investors skeptical and wary of getting involved, seeing it as too much risk.” It is,” said Ramachandran.

It is important to stay informed and involved with the latest developments and regulatory developments. Specifically, to overcome these barriers and harness the transformative potential of blockchain technology. Stadelman advised entrepreneurs to get involved in the blockchain community, participate in regulatory discussions and proactively address any challenges to support technological innovation.