Multichain and cross-chain are two terms you’ll be familiar with as you engage with the crypto ecosystem — but what are their differences?

Each of these technologies contributes something important to the blockchain space, but they do so in different ways — and understanding the function and limits of each one is essential for anyone trying to comprehend the crypto space and its future.

So what exactly do these terms mean, and how do they impact blockchain as a whole? In this article, we answer that question. But before we answer all of that, we need to discuss separately what is multichain and cross-chain.

Defining Multichain

The term multichain refers to decentralized applications that have been deployed across multiple blockchains that share similar smart contract technology. Ethereum, Avalanche, Polygon, BNB Chain, are all compatible with the Ethereum Virtual Machine (EVM) which enables developers to launch multichain dApps.

While originally the majority of the development in the crypto space was based on the Ethereum mainnet, the focus has now shifted to either the layer 2 blockchains like Optimism and Arbitrum, sidechains like Polygon, or alternative layer 1 blockchains like Solana and Avalanche.

Defining Cross-Chain

Cross-chain describes the communication between blockchains, and is the natural evolution of multichain. In cross-chain architectures, blockchains are not isolated silos, but are interconnected.

Cross-chain becomes possible thanks to cross-chain bridges and interoperability protocols like Ren Protocol, Multichain, and Connext, who have pioneered the concept of xCalls — the ability to call smart contracts across chains in a secure way.

Cross-chain vs. Multichain Comparison

So to summarize, mutichain technology creates an internet of blockchains capable of communicating freely while remaining secure thanks to a shared underlying security layer, while cross-chain technology uses smart contracts to create synthetic versions of your coins that are able to interact with other blockchains directly.

Weighing the Advantages

One important factor for builders considering whether to pursue cross-chain or multichain solutions is how implementing each approach factors into the overall strategy for scaling a blockchain ecosystem.

It’s easy to understand the benefits of a multichain approach: multichain inherently offers greater security but the money, time, and effort involved in this approach can’t be ignored.

A multichain approach may be inherently safer but building that sort of infrastructure comes with significantly higher up-front costs.

On the other hand, implementing a set of cross-chain solutions is generally a more straightforward proposition than building out a multichain ecosystem. And for users, regulated cross-chain solutions offer safety to users by insuring their funds in the event of a catastrophe.

Ultimately, cross-chain versus multichain approaches aren’t mutually exclusive. Cross-chain solutions can, are, and will likely continue to be used to facilitate the development of multichain ecosystems.

Rather than taking on such a large project all at once, projects can rely on bridges between popular networks as a temporary solution while a more effective long-term solution can be implemented.

The Future of Blockchain

Both approaches have their trade-offs and the inherently-superior security of a multichain approach may not be the factor that determines which approach will become more popular in the long run.

Unless a particular approach proves to be disastrous, it’s likely we’ll see projects embrace a range of strategies involving cross-chain and multichain approaches to scaling.

Removing the barriers between different blockchains will define the future of the space — and how far the technology can go. So understanding the different approaches to interoperability, as well as their limitations, is an essential lesson for anyone trying to deeply comprehend the crypto arena and where it might take us in future.

Now you understand the different approaches to developing interoperability, you’re empowered to make well-informed decisions as you explore the digital space yourself!