[Series: Crypto Q&A] Part 1/5: Multi Chain

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Blockchain and cryptocurrency are among the leading technologies in the world. Once users in the crypto community discover more and more applications from blockchain, widely applicable, the need to use and reserve cryptocurrencies (cryptocurrency) – an inevitable reward for maintaining decentralization for blockchain becomes increasingly high. Over the years, many cryptocurrency wallet applications have emerged, meeting the criteria of becoming an optimal wallet and interacting well with blockchain applications is still being addressed

So what features from an optimized wallet are expected by the crypto community? We will analyze these features in the first post of our 5-part Crypto Answers series – Part I: Multi-chain.

 

What is multi-chain? Why is the crypto community interested in this feature?

Multi-chain refers to the wallet’s function that enables the interaction with many different blockchains, allowing for diverse D-apps integration of multiple blockchains on the same wallet application (Li and Zhang 2019). To understand better, we need to go from what blockchain is.

Blockchain consists of a series of consecutive unified blocks, the previous block is linked to the next by a chain called “tx hash” that cannot be edited or deleted because of the supervision of many surrounding decentralized nodes.

Thus a blockchain chain cannot be edited or interrupted to change the information after the block has been validated by all nodes (closed the block). Currently in the crypto market, Bitcoin is considered as the first blockchain chain where nodes agree with each other to maintain the system on the PoW (Proof of Work) algorithm [1]. However, with this algorithm, Bitcoin’s transaction time is very slow, averaging 10 minutes per transaction, and is even longer when multiple transactions arrive at the same time. To solve this problem, the consensus mechanism and algorithm needs to be changed, so there are many other blockchains born with different algorithm such as Ethereum, Monero, TRON, Nexty, EOS etc.

 

Why is storing coins on a single-chain not enough?

Each blockchain has its own native coin, and other tokens built on top of that blockchain [2]. For example, everyone knows the native coin of the Ethereum blockchain is the famous ETH coin, currently standing at # 2 on the coinmarketcap chart. However, there are many other coins (tokens) built on the Ethereum blockchain, collectively called ERC-20 Tokens [3] such as BNT, REP, CVC, OMG, PAY, etc,. Because these tokens are based on the same blockchain, so if a crypto wallet, such as My Ether wallet, Trustwallet, supports ETH, it will surely store and integrate the ERC-20 tokens mentioned above. However the needs of cryptocurrency users are increasingly high, the ability and need to own many coins / tokens on many different chains is easy to understand. There is no reason to limit investors to only buy coins built on the Ethereum blockchain or Bitcoin blockchain. Users want more than a crypto wallet that can only store coins/tokens of only one blockchain. Owning multiple coins from different blockchains can cause a lot of headache as there are too many wallets to handle at once. 

Furthermore, after three years of the blockchain boom as Bitcoin hit 20,000 USD/BTC [4] and became the most expensive coin in history, expectations for this technology are higher than simply exchange functions. The applications of blockchain such as smart contracts, D-apps, big data, and the internet of things have been increasing resulting in amazing numbers. According to the D-app review page, in the first quarter of 2020, the total transaction volume on the D-app is worth 7.9 billion USD on 13 blockchains, an increase of 82.2% compared to the first quarter of 2019 [5]. This shows that right now and in the future, the need to interact with D-apps of many different blockchains is extremely large that the electronic wallet technology that only supports one blockchain will not be able to integrate the D-app. -app. Take an easy to understand case as follows: For example, you want to install and play the game “Dice” (“Dice”) – a Dapp on the crypto wallet built on the EOS blockchain that requires transferring EOS tokens, and playing the game “Dice.” 2win ”- you have to install at least 2 wallet applications and switch back and forth. The problem is that when technology advances rapidly there will be dozens or even hundreds of Dapps, then will you be ready to install hundreds of wallet applications on your phone? Such a small detail, can be frustrating in the long run, hindering users from experiencing the magic of cutting-edge technology.

 

How important is the multi-chain feature to a crypto user?

Now you have probably envisioned what multi-chain is and why it is vital for a crypto wallet. Indeed, multi-chain is a feature that allows the same wallet application to integrate multiple wallet addresses from many different blockchains. Accordingly, integrating D-apps of many different chains requires only one wallet installation. Users will experience the convenience of interacting between D-apps and wallet, and make transactions without having to download, logging in, opening and closing many confusing apps.

A bigger question is that when users are able to gather all their assets in one crypto wallet, will the management process be confusing, and how can users manage their many different assets in the most effective way? 

To find out, you can read Part 2/5: Multi-address feature.

 

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