Blockchain Bridges: All You Need To Know

Blockchain bridges help to connect the isolated crypto ecosystems. Tokens & data can be exchanged between blockchains via an interconnected network.

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One of the most significant limitations of the blockchain space, as it developed and expanded, has been the inability of different blockchains to collaborate. Each blockchain operates under its own set of rules, tokens, protocols, and smart contracts. 

Blockchain bridges help to break down these silos and connect the isolated crypto ecosystems. Tokens and data can be easily exchanged between blockchains via an interconnected network.

Let’s take a look at this article to learn all about blockchain bridges.


What’s a Blockchain Bridge?


A blockchain bridge is known as a protocol that connects two blockchains in order to allow communication between them. If you already own bitcoin but want to participate in DeFi activities on the Ethereum network, a blockchain bridge enables you to do so without selling it. 

These protocols work like a physical bridge connecting two islands, with the islands being separate blockchain ecosystems. In order to achieve interoperability within the blockchain space, blockchain bridges are essential.

Types of blockchain bridges

Blockchain bridges are classified based on their functions, mechanisms, and degrees of centralization.


Blockchain bridges are classified by level of centralization.

One popular classification divides blockchain bridges into two types: custodial (centralized) and non-custodial (decentralized).

Custodial bridges require users to put their trust in a central entity in order for the system to function properly and safely. Users should conduct extensive research to ensure that this entity is reliable.

Non-custodial bridges are decentralized, relying on smart contracts to manage the crypto locking and minting processes, eliminating the need to rely on a bridge operator. In this case, the security of the system is only as good as the underlying code.

Blockchain bridges are classified by functions.

Another classification is based on the operation of a blockchain bridge. Wrapped asset bridges and sidechain bridges are two examples.

Wrapped asset bridges enable crypto interoperability, such as transferring bitcoins to the Ethereum network by wrapping the BTC in an ERC20 token compatible with the Ethereum network. 

Sidechain bridges connect the parent blockchain to its child sidechain, allowing the two to communicate. They are required because the parent and sidechain consensus mechanisms may differ. 

One example is xDai Bridge, which connects the Ethereum mainnet to Gnosis Chain (formerly xDai blockchain), a stable payment sidechain based on Ethereum. xDai is protected by a different set of validators than those who keep the Ethereum network running. The xDai Bridge facilitates the exchange of value between the two chains.

Blockchain bridges are classified by mechanisms.

Bridges can be one-way (unidirectional) or two-way (bidirectional). A one-way bridge means that users can only bridge assets to one destination blockchain and not back. Assets can be bridged in both directions using two-way bridges.

How do blockchain bridges work?


Token transfer is the most common use case for a blockchain bridge. For instance, suppose you want to move your bitcoin (BTC) to the Ethereum network. One option is to sell your BTC and then buy ether (ETH). This, however, would result in transaction fees and expose you to price volatility.

You can also achieve this goal without selling your cryptocurrency by using a blockchain bridge. When you bridge 1 BTC to an Ethereum wallet, a blockchain bridge contract locks your BTC and generates an equivalent amount of Wrapped BTC (WBTC), an ERC20 token that is compatible with the Ethereum network. 

The amount of BTC you want to port is locked in a smart contract, and the equivalent tokens are issued or minted on the destination blockchain network. A tokenized cryptocurrency is referred to as a wrapped token. It is linked to the value of the asset it represents and can typically be redeemed (unwrapped) at any time.

This process involves a few steps from the standpoint of the user. To use the Binance Bridge, for example, you must first select the chain from which you want to bridge and then specify the amount. The cryptocurrency will then be deposited to an address generated by Binance Bridge.

Binance Bridge will send you an equivalent number of wrapped tokens on the other blockchain after the crypto is sent to the address during the time window. If you want to convert your funds back, simply repeat the process.

The benefits of blockchain bridges

The capacity to increase interoperability is the key advantage of blockchain bridges.

They make it possible to transfer tokens, assets, and data between various sidechains, layer 1 and layer 2 protocols, and different blockchains. Users of bitcoin can, for instance, explore the decentralized applications (dapps) and DeFi services of the Ethereum ecosystem using WBTC. The future success of the blockchain industry depends on a sector that is interoperable.

Blockchain bridges also help to increase scalability. Some blockchain bridges can process numerous transactions at once, increasing productivity. For instance, the decentralized two-way bridge known as the Ethereum-Polygon Bridge serves as a scaling solution for the Ethereum network. Users can gain from quicker transactions and cheaper transaction costs as a result.

Risks of blockchain bridges

Blockchain bridges, on the other hand, have some limitations. Attackers have taken advantage of flaws in the smart contracts of some blockchain bridges. Malicious actors have stolen massive amounts of cryptocurrency from cross-chain bridges.

Users may be exposed to custodial risks when using custodial bridges. A centralized entity operating behind a custodial bridge could theoretically steal funds from users. When purchasing custodial bridges, look for well-known brands with a long track record.

Transaction rate bottlenecks are another potential technical limitation. The throughput capacity bottleneck of a single chain could stymie large-scale blockchain interoperability.

A bridge can help a busy network become less congested, but moving assets to a different chain won’t address the problem of scalability because users won’t always have access to the same set of dapps and services. The Polygon Bridge, for instance, does not support all Ethereum dapps, which reduces the Polygon Bridge’s scaling effectiveness.

Lastly, due to the trust gap, blockchain bridges may expose the underlying protocols to danger. Since blockchain bridges link various blockchains together, the security of the connected systems is only as strong as its weakest link.

The future of blockchain bridges

Because of its high interoperability, the internet is a revolutionary system. Blockchain bridges are critical to increasing the interoperability and mass adoption of the blockchain industry. They have enabled some critical innovations, such as the ability for users to exchange assets across multiple blockchain protocols. The number of blockchain bridges, users, and total transaction volume have all increased significantly.

As the internet transitions to Web3, the demand for blockchain bridges is likely to increase. Future innovations may provide users and developers with greater scalability and efficiency. Innovative solutions to the security risks associated with bridges may exist. Blockchain bridges are critical to establishing an interoperable, open, and decentralized blockchain environment.

To conclude,

Constant innovation drives the growth of the blockchain industry. The pioneer protocols, such as the Bitcoin and Ethereum networks, are followed by a plethora of alternative layer 1 and layer 2 blockchains. The number of crypto coins and tokens has exploded.

They require blockchain bridges to connect their separate rules and technologies. Blockchain bridges are an essential component of the blockchain industry’s interoperable future. A blockchain ecosystem connected by bridges is more cohesive and interoperable, allowing for greater scalability and efficiency. With numerous attacks on cross-chain bridges, researchers are looking for a more secure and robust bridge design.


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