A blockchain bridge connects two blockchains to move bitcoin across them. The bridge lets people spend Bitcoin like Ethereum.
Using a blockchain bridge, or cross-chain bridge crypto, users may move bitcoin across blockchains. Bitcoin holders may make Ethereum-like transactions using the bridge.
Blockchain had trouble cooperating. Each blockchain works well in isolation but is limited by its environment. This causes congestion and expensive transaction costs.
Blockchain bridges provide communication between two platforms, enabling token transfers, smart contract execution, data sharing, and other instructions.
Each blockchain has its own currency and rules, but a bridge makes it simple to switch between them. If we could access several blockchains on the same network, our crypto experience would be much better.
Despite having different purposes, this is comparable to Layer 2 solutions. Layer 2’s performance gain is good, but it’s incompatible since it’s based on an existing blockchain. Cross-chain links exist outside any particular blockchain, therefore no blockchain may claim ownership.
The Function of Blockchain Bridges
Blockchain bridges may convert smart contracts and transmit data, but the token transfer is their most common usage. Bitcoin and Ethereum each have their own rules and processes. The establishment of a blockchain bridge allows bitcoin users to shift their currency to Ethereum for uses not feasible on the bitcoin network. Buying Ethereum tokens or making low-fee payments are examples.
If you have Bitcoin and wish to transfer some to Ethereum, you can use a blockchain bridge. Nothing cryptographic is transmitted. Instead of transferring Bitcoin, a smart contract locks the amount and releases Ether. Any leftover ETH will be burned and converted to BTC when you request a return to BTC.
If you do this regularly, convert bitcoin to ETH on a trading site, withdraw it to a wallet, and then deposit it to another exchange. You’d spend more on shipping and handling than on your original goal.
Consider that you may use a Visa card to pay MasterCard bills or a PayPal account to pay for any online transaction, regardless of the merchant. Interactions between systems and protocols are swift and painless. Interoperability has been a financial system cornerstone long before cryptocurrencies. Cross-chain bridges are a crucial step toward normalcy as blockchain technology expands beyond cryptocurrencies.
Comparing Trust-Based vs Trustless Blockchain Bridges
Blockchain bridges centralize. Users give up control of their cash by entrusting a third party with their coins during a conversion. This technique produces wrapped tokens like wBTC. “Wrapping” Bitcoin in an ERC-20 contract makes it behave like an Ethereum token.
Trust-based bridges are a fantastic option for sending a lot of cryptocurrencies fast and inexpensively, but there are few suppliers. Smaller retailers are less interested in lesser-known products with larger potential returns.
Decentralized blockchain bridges, also known as trustless bridges, are an option for those who want to feel more secure while sending and receiving cryptocurrency. These systems function similarly to a blockchain in that several networks collaborate to verify transactions. You may rest easy knowing that your coins won’t fall into the wrong hands when you use a trustless bridge. The main issue with decentralized bridges is that their service is provided on a freelance basis. Since of this, when problems arise, you may be left holding the bag because they are only compensated to handle your request.
