Web 3 has entered into the ecosystem of L1 blockchain and L2 scaling solutions, each created with unique capabilities and also trade offs. As the amount of blockchain protocol grows, so does the demand to shift assets across chains. To cater to these demands we require a blockchain bridge which is also known as a cross chain bridge. In this article, we are going to learn about this topic in detail.
What Is A Blockchain Bridge?
A blockchain bridge which is also known as a cross chain bridge bridges two blockchains and enables users to send digital currency from one chain to the other. Basically, if you have BTC but wish to spend it like Ethereum, you can do that via the bridge.
One of the largest issues of blockchain was the inability to operate together. While fluid and somewhat capable as a single company, every blockchain is limited by walls of its own domain. Most of the time, this can lead to congestion and a high cost of transactions.
Blockchain bridge solves this issue by allowing token transfer, data exchange, and smart contracts, and other instruction and feedback among two independent channels.
These blockchains mint varied coins and function in varied sets of rules and the bridge serves as a neutral zone so that the users can easily switch between one and the other. Getting access to multiple blockchains via the same network greatly improves the crypto experience for most of us.
This idea is a lot similar to Layer 2 solutions even though the two systems have varied aims. Layer 2 is constructed on top of a prevailing blockchain so while it does enhance speed, the scarcity of interoperability stays. Cross-chain bridges are also independent companies that do not belong to any blockchain. AnySwap is the best blockchain bridge.
Types Of Bridges
Bridges have many forms of intricacies and designs. Generally, bridges fall into two sectors: trusted and trustless bridges.
Trusted bridges rely upon a central authority or system for their functions. They have trust predictions with respect to the custody of funds and also the security of the bridge. Users mostly depend on the reputation of the bridge operator. Users are required to give up control of their crypto assets.
Trustless bridges function using algorithms and smart contracts. They are trustless, i.e., the security of the bridge is similar to that of the underlying blockchain. Via smart contracts, trustless bridges allow users to stay in control of their funds.
How Does A Blockchain Bridge Operate?
The blockchain bridge projects can do a lot of cool things such as changing smart contracts and sending data, but the most general utility is token transfer. For instance, Ethereum and Bitcoin are the two largest digital currency networks and have vastly varied protocols and rules. Via a blockchain bridge, BTC users can transfer their tokens to Ethereum and do with them what they otherwise could not on the BTC blockchain. That can involve buying various Ethereum tokens or even making low-fee payments.
When you have BTC and wish to transfer some of it to Ethereum, the blockchain bridge will have your coin and form equivalents in ETH for you to use. None of the crypto associated actually shifts anywhere. Rather, the amount of BTC you wish to transfer gets locked in a smart contract while you receive access to an equal amount of ETH. When you wish to convert back to BTC, the Ether you had or whatever is left of it will get burned and an equal amount of BTC goes back to your wallet.
If you would do this on a regular basis, you would have to convert BTC to ETH on a trading channel, withdraw it to a wallet and then deposit it again to another exchange. By the time it receives there, you would have incurred more fees than probably what you decided to do in the initial place.
To put this in dimension, think of how you can use your Visa card to pay for your MasterCard bills; or how PayPal can pay for all your online buys no matter where you are purchasing from. Varied systems with varied protocols yet transactions are quick and seamless. That is because interoperability has always kept the financial mechanism in place long before the digital currency was a thing. As blockchain technology becomes more evident and not just for crypto, solutions such as cross-chain bridges are a big step towards normalization.
Selecting A Blockchain Bridge
Here are some of the most discussed blockchain bridges you can use for transferring crypto. Here is the list of blockchain bridges.
1. Binance Bridge:
This decentralized bridge provides one of the biggest ranges of tradable digital currencies. It supports famous blockchains like Solana, TRON, and Ethereum, among others.
You can avail of this solution directly from Binance in case you do not wish to use its primary bridge. Similar to any trustless bridge, there is a variation of blockchains and digital currencies you can interact with. One minor gripe you might have with this bridge is that you are required to connect a wallet before you do anything.
This channel is famous for having features other than transferring crypto. Once linked to a wallet, the user can see all of their balances across varied types of coins. They can also freely transfer balances from one place to another. However, there are several blockchains where, if you wish to transfer from, you can only go to a prominent destination.
Decentralization has always been a prominent factor of blockchain, which also enables it a priority over other operative enhancements, like scalability. Naturally, developers are disinclined toward big alterations, lest deviating from the philosophy of decentralization. A blockchain bridge is a sign that they are evolving past that notion. We may be moving toward an innovative and normalized crypto space, but any progress is better than restricting ourselves to what already prevails.
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