What are blockchain bridges and how to use them

Blockchain Vektoren von Vecteezy

Blockchain bridges, also called cross-chain bridges, connect two blockchains and allow users to transfer cryptocurrencies from one chain to the other. Blockchain bridges work similarly to the bridges we know from the physical world. Just as a physical bridge connects two physical places, a blockchain bridge connects two blockchain ecosystems. Bridges make it easier for blockchains to communicate with each other by transferring information and assets. If you own Ethereum but want to use it as BNB, you can do so via a blockchain bridge.

One of the biggest problems with blockchain has been the inability to interact. While blockchains as a whole are agile and efficient to a certain extent, each blockchain is limited by the boundaries of its own space. This leads to high transaction costs and often congestion.
Chain bridges solve this problem by enabling token transfers, smart contracts and data exchange, including instructions between two independent platforms.
These blockchains mint different coins and operate according to different rules. The bridges act as a neutral zone, allowing users to seamlessly switch between them; access to multiple blockchains on one network greatly enhances the cryptocurrency experience.

Types of bridge

There are different models for bridges, but they generally fall into two categories: centralised bridges, which are based on trust and federation, and more decentralised, so-called “trustless” bridges. Centralised bridges actually rely on a central authority or system for their operation. This means that users must trust an intermediary to use a particular application or service.
Trustless bridges, in contrast, are bridges that do not require users to trust a single organisation or authority. Rather, trust turns out to be a mathematical truth embedded in the code. In a decentralised blockchain system, this truth is reached by multiple computer nodes reaching a common agreement based on rules written into the software. This eliminates many of the problems of centralised systems that can lead to corruption and abuse of power by providing transparency and incentives for broad participation.

So, blockchain bridges come in many different designs and with many subtleties. In general, bridges can be divided into two categories: trusted and trustless bridges.

Blockchain Vektoren von Vecteezy

Trusted Bridges

  • Trusted bridges depend upon a central entity or system for their operations.
  • They have trust assumptions with respect to the custody of funds and the security of the bridge. Users mostly rely on the bridge operator’s reputation.
  • Users need to give up control of their crypto assets.

Trustless Bridges

  • Trustless bridges operate using smart contracts and algorithms.
  • They are trustless, i.e., the security of the bridge is the same as that of the underlying blockchain.
  • Through smart contracts, trustless bridges enable users to remain in control of their funds.

Risk using bridges

The bridges are in the early stages. The optimal bridge design probably still has to be found. Each type of bridge carries certain risks. The most well-known are:

  • Smart contract risk: risk of code errors and loss of user funds.
  • Technological risk: software failures, faulty code, human error, spam and malicious attacks can disrupt the user experience.

As trusted bridges create additional trust conditions, they carry additional risks, like:

  • Censorship risk: Bridge operators could theoretically prohibit users from transferring assets across the bridge.
  • Custodial risk: Bridge operators could collude to steal users’ funds.
    Users’ funds are at risk if:
    – there is a flaw in smart contracts
    – a user makes a mistake
    – underlying blockchain is hacked
    – bad intent on the part of the trusted bridge operator
    – Bridges get hacked.

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