Interoperability in blockchain refers to the ability of different blockchain networks to communicate, share data, and transfer assets seamlessly among themselves. Traditionally, blockchains operate as isolated systems. For example, networks like Bitcoin and Ethereum function independently, with their own protocols, consensus mechanisms, and token standards. Without interoperability, assets and information cannot easily move between these ecosystems.

Interoperability solves this limitation by creating bridges and protocols that connect separate blockchains. It enables users to transfer tokens across networks, developers to build applications that interact with multiple chains, and businesses to integrate blockchain systems more efficiently. This improves flexibility, scalability, and overall innovation within the blockchain space.

One major benefit of interoperability is enhanced liquidity. When assets can move freely between chains, users gain access to broader markets and decentralised finance (DeFi) opportunities. It also reduces fragmentation in the crypto ecosystem, allowing projects to collaborate rather than compete in isolation.

Technologies such as cross-chain bridges, atomic swaps, and interoperability-focused platforms like Polkadot aim to address these challenges. These systems are designed to ensure secure communication while maintaining decentralisation and transparency.

In essence, interoperability is key to the future of blockchain. By enabling networks to work together, it transforms isolated digital ledgers into a connected ecosystem, unlocking greater efficiency, usability, and global adoption.