A Leading Layer 2 Platform Looking To Tackle Crypto's Interoperability Issue

According to many, blockchain will change the world.

This idea might not be registered completely yet, but major players are betting big that they eventually will. Blockchain’s current perception compares to the Internet’s perception in its infancy; namely, it appears to be a complex technology with numerous potential implications on the world. 

Like the Internet, its paradigm-shifting implications are rejected by many. Bill Gates was famously laughed at when he said the Internet would change the world. For blockchain advocates, this is history rhyming. To them, blockchain is a world-changing technology capable of disrupting the world’s biggest markets and transforming people’s everyday relationship to their data, finances and identities. 

However, even amongst the believers, no one is certain what final form blockchain will take. What is certain is that money and intellect is following the industry closely. According to Galaxy Digital, venture capitalists spent over $33 billion on blockchain projects in 2021. 

Despite the capital overload, threats to blockchain’s emergence are brewing underneath the surface. 

Issues In The Blockchain Space

While its implications on finance, banking and the internet have begun to manifest via entrepreneurial pursuits (think Aave, Polygon, SolidBlock), the blockchain industry remains rife with fraudulent agents and fundamental deficiencies. 

FTX’s collapse exemplifies the threats accompanying blockchain’s “coming of age,” but many believe the industry’s biggest threat lies in more deeply-rooted issues than those of trust. Interoperability, for example, ranks highly on the list of roadblocks to blockchain’s mainstream adoption. 

In essence, interoperability is the ability of independent systems to exchange and make use of information. This function creates value in many systems people use on a daily basis. Interoperability is what allows Outlook and Gmail users to communicate with one another and what allows two bank account holders in Japan and Canada to easily send and receive funds.

Interoperability is scarce in the blockchain industry. Up to this point, layer-1 blockchains like Ethereum, Bitcoin and Solana cannot directly exchange data and value between each other.  For true large-scale adoption to occur, communication between blockchains must be a seamless, effortless process. 

Coinweb: A Layer 2 Blockchain

With over 170,000 unique users and over 3 million transactions to date, Coinweb is one popular DLT project aiming to tackle blockchain’s interoperability problem (and many others). 

Coinweb is what’s known as a layer-2 platform; it ‘sits above’ existing layer-1 platforms (ex: Ethereum, Bitcoin and Elrond) and connects them together. Layer-1 platforms contain an inordinate amount of information, and the mass synchronization of this information across multiple layer-1s is a task packed with technological complexities. 

All non-technical consumers need to know is that Coinweb helps layer-1s exchange information amongst one another, which enables interoperability. Specifically, Coinweb enables projects, companies and developers to build on top of their platform and to take advantage of the functionality of the multiple chains they connect to. On top of that, Coinweb creates products that make it easy to connect and use advanced blockchain technology for practical purposes. 

For example, Coinweb’s cross-chain tokenization platform, named LinkMint, allows businesses to create tokens that can move across chains (i.e. achieving interoperability) without requiring any coding knowledge. Additionally, these tokens can then be linked to real-life assets like real estate and intellectual property. 

Additionally, the Coinweb Wallet and Marketplace (DeconX) will provide a direct gateway for anyone to send, receive and trade tokens with others and even exchange crypto with fiat currencies. Coinweb’s regulatory umbrella supports crypto operations across North America, Europe and Asia-Pacific. It also includes integrated fiat rails with credit card processing, SWIFT, SEPA, Faster Payments and online transfers as well as pre-paid crypto debit-card issuance. 

Perhaps most interestingly, Coinweb also offers multi-tenancy wallets (i.e. “White-labeled” wallets). Organizations can partner with Coinweb to create their own branded wallet with custom designs and functionalities, allowing their communities to create tokens within their own ecosystems. For example, a hotel brand could create their own wallet, issue tokens and use those to provide loyalty programs and create hotel bookings. 

The Future Of Interoperability And Coinweb

“The general concept of one chain to rule them all or an Ethereum-Killer chain to come along … these kinds of maximalist ideas are fully by the wayside,” said Coinweb CEO Toby Gilbert in an exclusive interview with Benzinga. “What we’re really seeing a push for today are layer-2 platforms, platforms that sit above existing layer-1 blockchains and connect them together.” 

With Coinweb, the blockchain industry could be on the verge of achieving the connectivity it needs to foster mainstream adoption. Mr. Gilbert tells Benzinga that this is only the beginning of Coinweb’s mission.

On Dec. 22, 2022, Coinweb announced it has partnered with BMW to deliver Cross-Chain Smart Contract architecture and build a blockchain loyalty program. In the future, it will release a public software development kit (SDK) to allow developers to freely build on top of the Coinweb platform. 

For more information on CoinWeb, catch the project’s presentation at the Future of Crypto conference, and visit their website here.

Featured Photo by Shubham Dhage on Unsplash

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