Understanding blockchain bridges

Introduction

One of the significant limitations of blockchain technology is the inability of various blockchains to interoperate. As a result, each blockchain is confined within the walls of its limitations.

Blockchain bridges let different blockchains interact and allow users to choose the best qualities of individual blockchains.

What are blockchain bridges?

A blockchain bridge, also known as a cross-chain bridge, connects two blockchains and allows users to exchange crypto assets and information between the chains.

Why are they needed?

Though the blockchain technology operates in a lego-model, one project builds on top of existing projects and rectifies them, the progress of the Defi space as a whole is slow. One of the reasons for this is the inability of blockchain ecosystems to interact with each other freely.

Bridges allow users and developers to access the strengths of various blockchains, each with its protocols, and even create new platforms in the process. Apart from freeing up congested networks, cross-chain bridges prevent the monopoly of a single network and are an integral aspect of maintaining market neutrality.

How do they work?

While using a bridge, the cryptocurrency tokens are not moving from one blockchain to another. Instead, the tokens get ‘locked’ in a vault of one blockchain, and new tokens of the same value are minted on the desired blockchain. The new tokens that are minted on another blockchain are called wrapped tokens. These tokens mimic the value of the original tokens throughout their lifetime.

The wrapped tokens can easily be ‘unwrapped’ by burning the tokens on the second blockchain and triggering the release of the locked tokens on the original blockchain.

Types of blockchain bridges

1. Trusted bridges

In the case of trusted bridges, the users give up their tokens’ authority and completely trust a third-party custodian to lock their tokens and mint corresponding tokens safely. It is economical to transfer large sums of cryptocurrencies from one blockchain to another.

2. Trustless bridges

Trustless bridges use smart contracts to lock, mint, release, and burn crypto tokens on multiple blockchains. These bridges are more decentralized as the individual blockchains contribute to validating the bridge’s transactions. The users do not require to give up their tokens’ custody nor trust any third party.

Conclusion

Though risks, like bugs and hacks, are seen at times while using blockchain bridges, the introduction of bridges is a massive upgrade in scaling various blockchains and enjoying the aggregated benefits of all the blockchains.