Polkadot (DOT) Solves One of Web 3.0’s Biggest Problems

Between rising interest rates and rising crypto prices, one of the most important news stories for the industry almost completely disappeared yesterday. Polkadot’s parachain system is expanding with a new feature, Cross Consensus Messaging System (XCM for short). It allows communication between different blockchains. It’s a small step for Polkadot founder Gavin Wood. And a really big one for Web 3.0. Because XCM could solve one of the biggest problems in the industry in the near future: the reliance of many platforms on so-called blockchain bridges.

In Web 3.0, different blockchains like Ethereum or Solana often have to interact with each other. They are not inherently able to do this due to several differences in their design. Many platforms use blockchain bridges for this. They enable communication between native blockchains using different tricks. And at a very high price.

Polkadot vs. Blockchain Bridges

The gigantic security risk of these bridges has recently come to light, especially in the DeFi sector. According to analytics platform decentralizefinance.com, there are more than 70 of them today. There are $25 billion worth of cryptocurrency flowing through it.

With just three attacks on such bridges, hackers have stolen nearly $1.5 billion in recent months, such as $625 million in the worst DeFi heist in history in March 2022, the video game hack popular Play-To-Earn, Infinity Ax. You can read all the background information on this unprecedented raid and the danger of blockchain bridges to the industry in the current issue.

Every security expert BTC-ECHO has spoken to over the past few months agreed: Bridge hacks will continue and will continue to have disastrous consequences. They are an easy target and very lucrative. Vitalik Buterin, the founder of Ethereum, warned of the consequences in the most drastic way in a blog post in January 2022. According to him, they could endanger the entire ecosystem in the long term:

If there are a hundred blockchains with their own dApps and these become dependent on each other via bridges, then an attack on one of these chains is enough to infect the entire system.

Vitalik Buterin

Polkadot shows a way out of this fateful situation. Since its invention in 2016, the project around Ethereum co-founder Gavin Wood has been working on a secure and fast platform for exchange between blockchains – without any bridges, via so-called parachains. You can read an in-depth analysis of the system in issue 3 of BTC-ECHO magazine.

Polkadot and its community are already hailing XMC as the future of Web3.0, the dawn of a new era of blockchain. Regarding the release on Wednesday, May 4, 2022, one of the technical managers of the Parachain system, Hoon Kim, explained:

I see traditional smart contracts on isolated blockchains as a kingdom surrounded by walls. Then we have bridges which are like a trade route that connects these nations together. Now we have XCM. This is the blockchain free trade agreement.

Hoon Kim, Technical Manager at Polkadot

Unlike the Polkadot community, the market has not reacted significantly to this historic milestone so far. Polkadot price is up ten percent since XCM released on Wednesday and has therefore performed well on average in the overall uptrend. If you want to buy Polkadot yourself, you can do so on crypto exchanges like Binance or eToro.

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