Polkadot: The bridge between public and private chains

Rage Comment : Ethcore changed its name to Parity Technologies Ltd and released the Polkadot network, connecting public and private chains to achieve cross-chain communication. Currently, the project is still based on Ethereum and radiates to other private chains, with the goal of being compatible with public chains. However, the compatibility of the Bitcoin network is too difficult.

Translation: Annie_Xu

Ethcore recently changed its name to Parity Technologies Ltd, and the company's founder Gavin Wood recently released a document on Polkadot, introducing this new network that connects public and private chains.

Peter Czaban of Ethcore said that the concept is similar to sidechains, but the function of sidechains is temporarily limited to token transfers. In addition, "Polkadot can standardize sidechains and enhance communication between sidechains." Gavin Wood's document also mentioned that each sidechain requires different security measures, and Polkadot aims to provide "common security measures for all chains."

Polkadot is more than just a currency.

“It enables communication between contracts, even if they are on different chains. These communications may include transferring assets or tokens, as well as all other smart contract content, such as applying for and verifying loan agreements, verifying counterparties, selecting insurance types, etc.”

“So what this means is that you can have a variety of different chains at the same time — some public chains like Ethereum and Bitcoin, some maybe fully encrypted internal enterprise chains, and some maybe partially public industry consortium chains — and they can all automatically transact with each other.”

The document says the core idea is to distinguish between the way in which parties initiate and execute transactions and the way in which parties keep unified records.

“Polkadot provides the basic ‘relay-chain’ upon which many verifiable, globally synchronized data structures are built. We call these data structures ‘parallel’ chains or sidechains.”

Therefore, the alliance or bank can fork Ethereum, adjust it according to their own needs, connect it to the Ethereum public chain through Polkadot, or set different functions for different chains to achieve better scalability and efficiency.

“We are seeing high-value traditional blockchains like Bitcoin or Zcash coexisting with low-value ‘theme-chains’ and test networks, with almost zero fees. There are also fully encrypted consortium chains running side by side with functional public chains such as Ethereum and providing services for them. There are also virtual machine-based chains such as Wasm chains that act as intermediaries to solve computer failures using blockchains such as Ethereum and Bitcoin.”

Although the project is just getting started, Wood publicly stated that Parity Technologies "has begun building the underlying consensus algorithm and preparing the proof-of-validity protocol." The company initially received support from the UK Innovate UK project, and subsequent investors were Melonport AG, founded by former Goldman Sachs trader and hedge fund manager Mona El Isa.

El Isa hopes to use smart contract technology to automate non-trading asset management and document management, and the way to achieve this is to launch Melon, a wealth management system similar to a hedge fund, which may become the first chain that can interoperate with the Ethereum network. Because Polkadot "has a backward compatibility layer with the Ethereum network, allowing Ethereum smart contracts to communicate directly with any chain."

It can also be interconnected with Bitcoin, but this requires a lot of work for two-way anchoring and a difficult hard fork; or use a "virtual side chain" as an intermediary between the two networks, but this requires "a lot of work, the time for implementation is still uncertain, and it may also require the cooperation of shareholders between the networks."

Therefore, Ethereum is still the main focus at present to achieve its interconnection with private chains, and other public chain networks are the upgrade targets.