What are Blockchain Bridges and How do they work?

What are Blockchain Bridges

Currently, the application of technology to digital investment has reached a certain advanced level. However, learning about blockchain platforms in this cryptocurrency transaction is essential for digital investors. In this article, Yield Nodes will share important information around what are Blockchain Bridges and how do they work? This model will help you a lot in cryptocurrency investment when you know it well.

What are Blockchain Bridges

Introduction to Blockchain Bridges

To understand what Blockchain Bridges are, the first thing you need to understand is what Blockchain is? There are major Blockchain ecosystems which are Bitcoin, Ethereum and BNB Smart Chain, all of them are based on their different programming language consensus protocols and rule systems.

What are Blockchain Bridges

Blockchain Bridges are a way to connect two separate Blockchains in economic and technological aspects to allow them to interact with each other. The above protocols act like a physical bridge to link two riverbanks, with the two riverbanks being understood as two separate blockchain ecosystems.

Because of that, blockchain bridges will enable interoperability. That is, digital assets and data stored on one blockchain can be interoperable with another. And that interoperability will be the foundation of the Internet: computers around the world will all use the same set of protocols to easily communicate with each other. Then, in the blockchain space, where there are many separate protocols, blockchain bridges will be essential to exchange data and values ​​easily.

How important is blockchain bridge?

The blockchain space is growing and expanding, there are a few limitations on blockchain and the most significant of them is the lack of operability of different blockchains. Each blockchain has its own rules, tokens, protocols, and smart contracts.

How important is blockchain bridge?

Thereby, Blockchain Bridges will disrupt these silos and will bring together isolated cryptocurrency ecosystems. When blockchain networks are connected to each other, it will allow tokens and data to be exchanged easily and smoothly.

In addition to allowing cross-chain money transfers, Blockchain Bridges provide other benefits. Blockchain Bridges allows users to access new protocols on other chains, allowing developers from various Blockchain communities to collaborate. In conclusion, Blockchain Bridges are a very important component of the future that can easily interoperate with blockchain industries.

How do they work?

In the most common use cases for Blockchain Bridges is token transfer. Example: You sell Bitcoin (BTC) to buy back Ethereum (ETH) to move your Bitcoin network to the Ethereum network. However, this will be detrimental to you as there will be transaction fees that expose you to price fluctuations.

Blockchain Bridges work
Blockchain Bridges work

Another way for you to achieve this goal is to use a Blockchain bridge where you don’t need to sell your cryptocurrency. When you connect Bitcoin to an Ethereum wallet, then the blockchain bridge contract will lock your Bitcoin and will generate an equivalent Wrapped Bitcoin (WBTC), which will be an ERC20 token compatible with the Ethereum network.

This means that the amount of BTC will be locked inside a smart contract in parallel with which the tokens will be issued on the target blockchain array or minted. A wrapped (protected) token is an encrypted version of a certain cryptocurrency. It will be pegged to the asset value it represents redeemable for it (Unwrapped Part) at any time.

From the user’s point of view, this process will be done through several steps. Example: When you use Binance Bridge, the first thing you will do is select the chain that you want to link and specify the amount to link. The cryptocurrency of your choice will then be deposited to an address generated by Binance Bridge.

While waiting for that amount to be sent to complete within a certain period of time, Binance Bridge will give you an equivalent amount of tokens wrapped on another blockchain. On the other hand, if you want to convert your money you need to do the reverse process.

Readmore: How to Buy Cryptocurrency and safe investment e-wallets in 2022

Types of Blockchain Bridges ?

Blockchains can be classified according to their function, mechanism, and degree of centralization.

Custodial vs. non-custodial bridges

There is a common classification that divides Blockchain Bridges into two categories: Custodian (centralized) and Non-custodial (decentralized).

Custodial vs. non-custodial bridges
Custodial vs. non-custodial bridges

Monitoring bridges will require users to trust a central organization to be able to operate the system correctly and safely. Therefore, users should do a lot of research on it to be able to understand and ensure that it is reliable.

On the contrary, unattended bridges will do so in a decentralized manner, it will rely on smart contracts to be able to manage the processes of locking and minting cryptocurrencies and eliminating trust in a single home. bridge operator. For this case, the security of the system is as good as the underlying code.

Functional blockchain bridging

There is another way of classifying Blockchain Bridges based on how it works. Good examples are the wrapped asset bridge and the sidechain bridge

We have wrapped asset bridges that already enable crypto interoperability, for example when you transfer Bitcoin to an Ethereum wallet by converting BTC to WBTC which is an ERC20 compatible token of the Ethereum network.

And then Sidechain bridges connect the parent Blockchain with its child Sidechain, which allows interoperability between the two. They are essential because between them there can be different consensus mechanisms.

Example: The xDai Bridge connects the Ethereum mainnet to the Gnosis chain (formerly known as the xDai blockchain), which is a highly stable payment sidechain based on Ethereum. xDai is secured by another set of receivers by the maintainers of the Ethereum network, the xDai bridge easily transfers between the two chains.

Blockchain Bridges by Mechanism

In this platform it will have one way bridge and two way bridge. That is, a one-way bridge, users can only connect their assets to a destination blockchain and cannot go back to its original blockchain. Two-way bridges allow the connection of assets to take place in two directions.

Benefits of Blockchain Bridges

When it comes to the benefits of Blockchain Bridges, one of the most important benefits of Blockchain Bridges immediately comes to mind is its great ability to improve interoperability.

They fully allow the exchange of tokens of assets and data across different blockchains for layer one and layer two protocols or in different sidechains.

For example WBTC has always allowed Bitcoin users to explore decentralized applications such as dapps or DeFi services of the Ethereum ecosystem. One area where Blockchain can be interoperable is critically important to the future success of the industry.

There is also another advantage of Blockchain Bridges that can improve scalability. Some Blockchain Bridges can handle a large number of transactions, contributing to improved efficiency. Example: Ethereum – Polygon Bridge is a decentralized two-way bridge that acts as a scaling solution for the Ethereum network. The end result is that users can benefit from faster transactions with lower transaction costs.

Risks of Blockchain Bridges

In addition to the benefits mentioned above, Blockchain Bridges also have certain limitations including: Attacks have exploited vulnerabilities of smart contracts in some Blockchain Bridges. A large amount of cryptocurrency has been taken away by malicious actors from cross-chain bridges.

Taking extra care can put users at risk with custody. The centralized entity behind a surveillance bridge would theoretically lead to the theft of user funds. When using custodial bridges, you need to look for established brands with a long track record.

In addition, there is another risk of restriction that is the congestion of transaction rates. It is here that congesting the throughput capacity of a chain can lead to hindering the interoperability of a large-scale blockchain.

While a bridge can potentially ease congestion on a busy network filled with work. That said, moving digital assets to another chain won’t solve the scalability problem because users don’t always have access to the same dapps and services. Example: Some Ethereum dapps are not available on Polygon Bridge which effectively limits its scalability.

Finally, Blockchain Bridge exposes underlying protocols to risks associated with disparities in trust. Since Blockchain Bridges connect to different blockchains, the overall security of the networks will be strongly interconnected for each weakest link.

What is the future of Blockchain Bridges?

The Internet is a revolutionary system, and high interoperability is one of the key parts of that revolution. Blockchain Bridges are extremely important to enhance interoperability for mass adoption of the blockchain industry. They enabled some much-needed innovation, which could allow users to easily exchange assets between blockchain protocols. Blockchain Bridges will grow significantly in terms of number of bridges, total transaction volume and users.

Demand for Blockchain Bridges will continue to grow until the Internet transitions to Web3. There will be future innovations that can provide scalability and increase efficiency for both developers and users. There may be a more creative way of dealing with the security risks associated with bridging. Blockchain Bridges are an integral part of building a scalable and decentralized interoperable blockchain space.


Through the above assessment information about What are Blockchain Bridges and How do they work? is the entire content about Blockchain Bridges that we draw from our experiences. Bottom line: The Blockchain industry is driven by constant innovations, the number of cryptocurrencies and tokens is increasing significantly. With many distinct rules and technologies, they need Blockchain Bridges to be established. connect with each other. At that time, the Blockchain ecosystem will be linked by stronger bridges and higher interoperability while opening the door for better scalability and efficiency.

Readmore: What Is Blockchain Technology and How Does It Work? – The future of blockchain

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