Blocknet is moving to the v18 base chain and gearing up to support business customers with the release of XRouter 1.0. In this article, I take a look at the inner workings of the Blocknet Protocol and what it offers.

Why Decentralization is Important

The internet as we know it is centralized. Centralization refers to a structure where one or a small number of entities control an entire network. At the moment, a small number of technology companies exert the most control over the internet and are powerful enough to set industry standards. Smaller entities are forced to use similar methods of operation. In this way, the current internet is centralized.

There are some serious problems with this. Billions of pieces of personal data are shared daily online and the vast majority are stored in giant servers located in a few places around the world. This data is vulnerable to direct attacks, such as hacking. The information is also sold, as a product, to brands in order to allow them to target the users for ads and services.

Blockchain Could Power a Decentralized Internet

A decentralized internet based on blockchain technology would rely on a network of many smart devices, as opposed to large corporate servers. This network includes a ledger of transactions and smart contracts that can be executed automatically when certain conditions are met.

A blockchain network may also have a native coin or token that helps to verify transactions and affords voting or governance rights to network participants. Each device connected to the blockchain would contribute to the distributed storage network system without any centralized servers. Indeed, it would have no centre(s) at all.

Decentralizing the internet with blockchain technology is appealing because it could lead to a more secure and fair internet than the one we know today. There would be no central points to hack and no way for a few powerful actors to take control of the information.

The Interoperability Challenge

Despite its promise, blockchain technology faces challenges before it can become a foundational technology for the internet. One of these is “interoperability”. This refers to the inability of different blockchains to communicate with each other and share information. This is why Bitcoin cannot be exchanged for Ethereum without using a third-party exchange or application.

The nature of the design of blockchains means they can only communicate with themselves and not with other blockchains. They are not inherently interoperable. They start out isolated from one another. No information can be directly transferred between them.

As a result, blockchain-based applications can only deliver services within the confines of the limited customer base on a particular blockchain. If a blockchain service wants a wider user base it must sacrifice the unique properties of blockchains by delivering the services via a centralized platform.

Various solutions have been suggested to achieve this. Some projects are pursuing the idea of hybrid blockchains, for instance, which are chains unto themselves that can interact with other blockchains.

Internet of Blockchains

One new solution has been developed by Blocknet, which enables different blockchains to communicate and exchange information directly, without an intermediary entity. It is described as an “internet of blockchains” in the sense of creating broad, generic interoperability which developers can use to connect blockchains freely, no longer confining them to one single platform. This is the Blocknet Protocol and it is powered by 3 key components.

XRouter

A key component of Blocknet’s services is XRouter, which is a communication layer for the interoperability protocol. It consists of an inter-blockchain “light wallet” (i.e. a simplified payment verification backend) that verifies blockchain records without downloading the full blockchain.

XRouter functions are akin to the TCP/IP level that the internet is founded on and is compatible with any blockchain network, including all DLTs (such as IOTA and Hashgraph) and private chains (such as Hyperledger and R3). It allows interactions between any smart contract platform and any other blockchain, even those that do not have smart contract capabilities.

This type of technology would let developers create lightweight microservice architectures that use contracts, protocols, and services from various blockchains. Developers could mix and match smart contracts from different chains without rewriting them from scratch, saving both time and money.

The way XRouter works is by using the Blocknet service node network of approximately 500 nodes to direct service requests directly to the respective blockchains. Packet routing happens on the networking layer. For example, creating a dApp on Ethereum may require storage functionality, which Ethereum doesn’t intrinsically handle very efficiently. XRouter makes it possible to interact with blockchains such as Storj, Filecoin, Sia, or Swarm to use their storage services.

XRouter would also be beneficial for the pharmaceutical industry as manufacturers are strictly regulated and need to provide information and assurances to sell their products. Accessing batch information about temperature and humidity during transportation and the final destination is important. A smart contract could use XRouter to gather this information from each respective chain and write it to the pharmaceutical company’s blockchain along with the batch code (APIs can be viewed here).

XCloud

XCloud is a decentralized cloud network powered by XRouter. This is a tool that lets developers put both blockchain and non-blockchain microservices on a “public cloud” decentralized network. XCloud allows for interaction with microservices, blockchains, APIs, and cloud tech hosted by Blocknet service nodes. This means a service can be monetized using XCould without having to re-code or change the existing applications.

XBridge

XBridge is a distributed hash table (DHT)-based peer-to-peer network with nodes that are integrated with nodes on other networks, making the XBridge an inter-chain network overlay. Nodes on any blockchain can lookup and broadcast between each other. Cross-chain atomic swaps can be performed between any digital asset that supports CLTV and JSON RPC.

How is Blocknet a Decentralized Internet of Blockchains?

It is fair to describe the Blocknet protocol as decentralized, as it creates interoperability by enabling the transfer of data between different blockchains. The Protocol does not have a chain of its own. It is a truly chain-agnostic connector. The first app built on the protocol was a Block DX, a decentralized exchange that enables wallet to wallet trading. Blocknet used this to showcase how the protocol enables inter-blockchain services and data transport. You can learn more about Blocknet by joining their Discord and Telegram communities.

A version of this article was originally published in Hacker Noon.

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