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Blockchain interoperability refers to the ability of different blockchain networks to exchange and make use of information seamlessly. This concept allows for the free flow of data and transactions across various blockchain systems, enabling them to interact with each other effectively. Interoperability is vital for the evolution of blockchain technology as it enables diverse platforms, like Bitcoin and Ethereum, to transact and communicate without barriers, enhancing functionality and user experience.

One common method to achieve interoperability is through atomic swaps, which enable direct, peer-to-peer exchanges of different cryptocurrencies in a decentralized manner. Another approach involves the use of cross-chain technology or protocols that facilitate data transfer and asset exchange between different blockchains. Examples include wrapped tokens like Wrapped Bitcoin (WBTC), which represent a cryptocurrency from one blockchain on another, and decentralized exchanges like AtomicDEX that support cross-chain trading.

Blockchain interoperability solutions address challenges such as scalability, network efficiency, and broader application of blockchain technology across various industries. These solutions also help in creating a more connected and efficient blockchain ecosystem, where different chains can share resources, information, and value, contributing to the overall growth and applicability of blockchain technology.

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