What are Blockchain bridges, and how do they work? 

When we mention blockchain bridges, we want you to visualize an actual bridge.  

A good example is the Golden state bridge, one of the most famous bridges in the world. It connects San Francisco to Marin County in California.

This article explains how a blockchain bridge connects different crypto ecosystems. It allows the transfer of crypto tokens from one crypto ecosystem to another. 

In the same way, it would be hard to move from San Francisco to Marin county without the Golden State bridge, it is a hassle moving tokens from one blockchain to another without bridges. 

Remember the famous quote about crossing the bridge when we get there? We are crossing that bridge right now. Let us cut to the chase.

What is a blockchain, and how does it work?

Before we get to Blockchain bridges, let us first understand how blockchain technology works.

A blockchain is a decentralized peer-to-peer ledger. Blockchain technology makes digital assets secure and decentralized. The transactions and the data in a blockchain are irreversible.

The main difference between a blockchain and a regular database is that a blockchain collects information in groups called blocks. The blocks can store data to a specified capacity. 

The blocks link to previously filled blocks. The links between these blocks create a blockchain. A database, on the other hand, structures its information in tables and stores its data in a computer system. 

The question is, what happens when you want to send a crypto token on a particular blockchain? 

The transaction is first requested. A block representing the transaction is created and sent to the peers in the network.

The peers validate the transaction and receive a reward for their proof of work. The new block joins the chain, and the updated blockchain gets distributed to the network. The transaction is complete.

This transaction takes place within a single blockchain. Though, you may need to complete a transaction between two different blockchains. Blockchain bridges come in at this point.

What is a Blockchain bridge?

The whole idea of coming up with digital currency revolves around decentralization. Digital currency should have thousands of stakeholders rather than being governed by organizations or individuals.

Different digital currency networks continue to grow. However, these networks working on their own limited the idea of decentralized currency. 

Therefore, there needed to be a way to expand the use of tokens from a particular network to a different crypto ecosystem.

The solution to this problem is using blockchain bridges that connect different crypto ecosystems.

A blockchain bridge is a tool that allows you to transfer tokens or data from one crypto network to another. Blockchain bridges connect incompatible blockchains with different structures, rules, and protocols.

So how exactly does this work? Imagine you have Bitcoin tokens. You want to use them on an Ethereum network. The Blockchain bridge receives the sent bitcoin tokens as a wrapped coin.

A wrapped coin is a token that represents a blockchain but exists on a foreign blockchain. The wrapped coin allows you to use your Bitcoin tokens on an Ethereum network.

To get your Bitcoins back, you send the wrapped Ethereum coins to the Blockchain bridge.

What happens behind the scenes during the transactions mentioned above? 

When you send your Bitcoin to the Blockchain bridge, the bridge locks the BTC tokens. The Ethereum Blockchain generates the equivalent amount of wrapped Bitcoins.

During the reverse transaction, the Wrapped Bitcoin tokens move to the bridge and go through token burning. Burning is destroying tokens permanently to balance supply and demand. The Bitcoin tokens are unlocked at the bridge and sent back to you.

Types of Blockchain bridges

The trusted blockchain bridges.

Trusted Blockchain bridges rely on central entities for their operations. The entities have a reputation that the clients can lean on during blockchain transactions. The less you know about an entity, the higher the risk.

This type of bridge requires a lot of trust because you give up control of your crypto assets. Although, it is a reliable way of transferring assets, fast and in large amounts.

Trustless Blockchain bridges.

On the other hand, trustless bridges are decentralized, unlike trusted ones. In this case, smart contracts and algorithms ensure you have control over your assets.

The factor to look for in trustless bridges is the security of the underlying blockchain. The bridge and the blockchain technology itself use the same security.

Benefits of using blockchain bridges

Interoperability

Blockchain bridges increase the scope of individual cryptocurrency ecosystems. It allows systems to talk to each other. 

This property allows you to send data to other blockchains even if they are incompatible.

Higher speed and lower cost

Blockchain bridges transactions are much cheaper and faster. The alternative way of selling one cryptocurrency, waiting to get cash, and buying the other crypto you want would take a lot of time. It would also cost more. Blockchain bridges make the process convenient.

Scalability

A single network can only handle a particular number of transactions. There is a delay when the demand exceeds the supply. Blockchain bridges reduce that pressure from individual crypto ecosystems. 

Are Blockchain bridges safe?

Blockchain bridges allow users to complete their transactions faster and at affordable rates. The downside is that using blockchain bridges is a risky venture. Let me explain what I mean.

Blockchain technology and how it works make it difficult for hackers to attack. The proof of work and proof of stake mechanisms makes it impossible to complete or reverse transactions illegally. However, we cannot say the same thing about blockchain bridges. 

The bridge makes users vulnerable to attacks. Incidents have happened where hackers made off with a huge chunk of digital assets. We will mention a few of them. 

The Ronin bridge attack, the largest heist so far, led to a loss of close to a whopping $625 million worth of assets. How did this even happen?

Reports say that the hacker used a private key and faked a withdrawal. The Ronin team only realized the attack after users complained they couldn’t make withdrawals.

The Wormhole bridge, which connects Solana and Ethereum blockchain, has been hacked. The hackers managed to get $320 million worth of digital assets. The attack was made possible by a bug found in a smart contract.

The Qubit bridge lost $80 million worth of assets. According to reports, the hacker found an error in their financial code. 

They used that vulnerability to input malicious data they used to withdraw tokens on Binance without any deposit made on Ethereum. They used the stolen assets to buy different cryptocurrencies.

Imagine losing such amounts of digital assets. The question that arises is, what action is being taken to reduce these risks? What does the future hold for blockchain bridges?

The future of Blockchain bridges

With the theft scenarios highlighted above, blockchain bridges need to be secured. What does a secure future for blockchain bridges look like?

After the attacks on different Blockchain bridges, companies like Protocon tried to look at the vulnerabilities to find a solution. According to them, the answer is finding a way to validate transactions from the blockchains involved.

Let me explain further. Only disclosed data is bundled to the hash value of a block when performing transactions using a blockchain bridge. Including the hash value would make it easier to validate a genuine transaction. You validate a transaction by confirming whether a value identical to the hash value is in the blockchain.

Blockchain developers should employ thorough security tests to ensure there are no loopholes. They can enroll in security audits or bug bounty programs to locate vulnerabilities in the bridge. 

With Blockchain bridges, we are looking at a future where every cryptocurrency ecosystem has at least one Blockchain bridge. The popular ones have several bridges. It becomes easier for users to transact their cryptocurrency across different Blockchains.

FAQs

What are the risks of building a blockchain bridge?

Smart contracts may contain bugs in their code that could make the bridge vulnerable to an attack. 

A failure in technology due to software failure or human error could pose a risk.

The bridge operators can stop a transaction or plot to rob funds from users.

Which are the top blockchain bridges?

The top blockchain bridges in the market include Voltswap, Binance bridge, Cbridge, Anyswap, and Multichain.

What is a chain-specific blockchain?

A chain-specific blockchain is a blockchain bridge that connects two chains and supports operations like locking, unlocking, and minting tokens.