Researchers at TU Wien have introduced a new protocol called "Glimpse" that facilitates exchanges between different cryptocurrencies. Unlike traditional methods that rely on centralized crypto depots, this protocol enables decentralized exchanges without compromising security.
A woman walks past signs advertising cryptocurrency banking at Union Station in Washington, DC, on March 16, 2023.
The Glimpse Protocol
It must be noted that cryptocurrencies operate on blockchains, which record every transaction and maintain a history of all transfers. These transactions can be more complex than simple bank transfers, as cryptocurrencies offer programmability through smart contracts.
These contracts stipulate specific conditions that must be met for a transaction to be valid, ensuring the successful completion of the transfer or its cancellation if conditions are not fulfilled.
While such transactions are possible within a single blockchain, cross-currency transactions between different cryptocurrencies pose challenges and are not supported by default.
According to the team, the newly developed Glimpse protocol addresses this issue by enabling efficient, decentralized, and secure exchanges between different cryptocurrencies.
The research was conducted in collaboration between TU Wien and Pantos, a decentralized multi-blockchain token system supported by Bitpanda, an Austrian financial services company.
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Proof of Transfer Using Small Amount of Data
Efficiency, compatibility, and expressiveness were essential considerations in developing the Glimpse protocol. Zeta Avarikioti, one of the researchers involved in the study, explained that the protocol needed to provide proof of transfer using a relatively small amount of data to ensure practicality.
Large amounts of data would render the protocol impractical, requiring hundreds of gigabytes of blockchain data. The protocol also aimed to be highly compatible with existing blockchains, supporting as many cryptocurrencies as possible.
"It has to prove that the amount was actually transferred by only using a relatively small amount of data. If large parts of a blockchain were needed for this, with hundreds of gigabytes of data, it would be completely impractical," Avarikioti said in a statement.
"In addition, the protocol should have the greatest possible compatibility with existing blockchains - as many cryptocurrencies as possible should be supported," Avarikioti added.
The new protocol has the potential to be integrated directly into current cryptocurrency software. The research team is currently in discussions with Bitpanda, their close collaborator, to explore integration possibilities.
According to Lukas Aumayr, the applications of the Glimpse protocol extend beyond cryptocurrency exchanges. The researchers demonstrate its utility in expressing crypto loans within smart contracts, facilitating other decentralized financial instruments such as asset migrations, and wrapping and unwrapping of tokens.
With the introduction of the Glimpse protocol, researchers have taken a significant step toward bridging different cryptocurrencies in an efficient, secure, and decentralized manner.
This breakthrough offers promising prospects for the future of the crypto world, enhancing its functionality and expanding its range of applications.
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