What is Crypto Bridging? A Guide to Cross-Chain Bridges

To match the security aspects of the Web3 space, conventional digital malpractices like social hacking and phishing have also been upgraded to target centralized and decentralized protocols. The ownership of users’ crypto assets must be ceded to the bridge itself. Let’s say you bridge ETH to WETH on Solana, and then Solana goes down . If people lose faith in the what is a blockchain bridge network, you might also see a sizable difference in the cost of your wrapped ETH tokens compared to ETH. But how do you move your ETH tokens from the Ethereum network to a Layer 2 chain, like Arbitrum or Optimism, or Coinbase’s upcoming Base L2 network? Users can partly avoid custodial risk by verifying the custodial bridge’s reserves via proof-of-reserves.

To sell the $BTC for $ETH and then transfer it out, you must first transfer it into a CEX. This entire procedure is longer and more laborious than simply using a blockchain bridge. Blockchain bridges generally assist in the quick and inexpensive movement of tokens between blockchains. The development of the blockchain industry is driven by constant innovations. There are the pioneer protocols like the Bitcoin and Ethereum networks, followed by a myriad of alternative layer 1 and layer 2 blockchains.

Types of Blockchain Bridges

Cross-chain development continues to grow in complexity, due in part to the growing number of blockchains and the differences between the chains. The majority of these issues are due to inconsistencies between chains. Bitcoin’s PoW consensus protocol and Tendermint’s PBFT consensus protocol are examples of cross-chain technology used in heterogeneous networks. The lack of cross-chain interoperability between blockchains is the reason why Bitcoin can’t operate on Ethereum.

types of blockchain bridges

Unsecure bridges can leave funds vulnerable even if the underlying blockchains or layer-2 networks are secure. Key considerations when it comes to securing a bridge are the cost of attack and the number of participants that would need to be bribed. Secure https://xcritical.com/ communication between blockchains without a trusted third party is challenging. Cross-chain communication inherently requires security, trust, or flexibility trade-offs that are not required for interactions that take place on a single blockchain.

What is a Bitcoin Bridge and How Does it Work?

Several bridges also try to avoid attacks by creating a reward system for audits of their protocols . Qubit bridge attack, the hacker bypassed the verification process by evading the bridge’s smart contract. That way, they could essentially provide proof of non-existent tokens to the bridge thereby allowing the attacker to mint new tokens on the destination chain without depositing any assets. Because blockchain bridges are still in the early stage of development, there are still some security concerns. These security concerns have led to security breaches on different blockchain bridges causing loss of assets.

  • As blockchain technology becomes more prominent and not just for crypto, solutions like cross-chain bridges are a big step towards normalization.
  • On the other hand, trustless bridges are more decentralized and considered the safer alternative for users transferring coins.
  • Bridges are crucial to onboarding users onto Ethereum L2s, and even for users who want to explore different ecosystems.
  • In addition, the risks with a blockchain bridge depend on the type and have a different impact on users and the blockchain community.
  • Porting tokens to another blockchain can help solve scalability issues and reduce fees.

The software behind cross-chain bridges works with cryptocurrencies and other digital assets. From connecting to public chains to custody, our digital asset platform is built to help you manage all digital assets and tokenization. This is the guarantee that funds on the destination chain will be available once they’ve been committed on the source chain. Without finality, a reversed transaction on the source chain could cause problems on the destination chain, like creating unbacked bridged tokens.

Certified Blockchain Developer™ Interactive Live Training

A blockchain bridge facilitates the conversion of one native asset from one blockchain to its equivalent on another blockchain. A trusted bridge is a cross-chain protocol controlled by a centralized entity. During bridging, the asset control moves from the users to the centralized authority. Users have to “trust” the integrity and efficiency of the centralized entity to perform the transaction.

types of blockchain bridges

As a result, users can benefit from faster transactions and lower transaction costs. Like any technology, blockchain bridges come with some inherent risks. For example, if the bridge is not adequately secured or audited, it could be vulnerable to hacks or exploits. Some blockchain bridges may require users to trust a centralized authority or intermediary. However, with proper precautions and careful vetting of the bridge technology, many of these risks can be mitigated.

Trust-less bridges

Zeroswap also intends to provide seamless access to multichains like as Ethereum, Polkadot, and BSC. You can access this solution directly from Binance in case you don’t want to use its main bridge. Similar to any trustless bridge, there’s a variety of blockchains and cryptocurrencies you can interact with.

types of blockchain bridges

Cross-chain bridges don’t actually move your BTC from the Bitcoin blockchain to the Ethereum blockchain. Instead, the bridge will create equivalent tokens that represent your BTC but are usable on the Ethereum blockchain. Smart contracts are created to keep track of everything you transfer and use. Cross-chain bridge software can interact with any blockchain if the software is designed to be compatible. However, more complex blockchains may be at a higher risk of security incidents.

Multichain, Celer cBridge and Portal Token Bridge are just a few of the cross-chain bridges available today.

This type of method does not necessitate the use of a centralized third party to enable deals. This isn’t perfect cross-chain communication, but it is a system in which transactions are performed between chains. Every blockchain is created in a protected ecosystem with its own set of rules and consensus protocols, resulting in limitations for each blockchain. As a result, there is no direct communication or token transaction between blockchains.

Decentralized Identity – Challenges & Solutions

A cross-chain bridge is a type of decentralized application that facilitates the transfer of assets from one blockchain to another. Bifrost has developed an EOS network bridge that enables trustless cross-chain asset transfer. Bitfrost is also planning to work on interoperability with EOS contracts. Snowfork is building a general-purpose bridge between Ethereum and Polkadot.