What are blockchain bridges?
Blockchain bridges work very similar to bridges in the physical world.
Just like a physical bridge connects two physical locations that have a gap between them, a blockchain bridge connects two blockchain ecosystems that would otherwise be separated from each other.
There are different types and features of bridges – some for sharing messages, and some for sharing assets. But in general, a blockchain bridge facilitates communication between blockchains.
Why does someone need a bridge?
All blockchains have their limitations, and with hundreds of blockchain networks, there should be some way for them to communicate with each other. But blockchains develop in isolated environments and have different rules and consensus mechanisms. This means they cannot communicate natively and tokens cannot move freely between blockchains. Bridges exist to connect blockchains, allowing the transfer of information and tokens between them.
Bridging the gap between ecosystems is also a great way for new users to explore more about crypto. If someone has ETH on Ethereum Mainnet and they want to explore another L1 to try their native apps, they are now able to use a bridge to transfer their ETH from Ethereum Mainnet to another L1 and use dApps in that new ecosystem.
But not all bridges are created the same.
In general, the two categories of bridges are trusted and trustless. Trusted bridges depend on a central entity or system for their operations and they have reliable assumptions about the custody of the funds and the security of the link. Trustless bridges work using smart contracts and algorithms and allow users to remain in control of their funds.
There are some risks in using bridges.
- Smart contract risk: risk of an error in the code that can lead to the loss of funds
- Censorship risk – bridge operators can theoretically prevent users from transferring their assets using their network.
- Custody risk – bridge operators can collude to steal users’ funds.
Bridges are essential links between ecosystems for the continued growth of crypto. But they are still early and have lots of problems to solve for mainstream adoption to be easier. Users who want more functionality for their assets and to explore other ecosystems with their assets can use bridges to do this, however, it’s important to understand the risks and tradeoffs of using bridges in crypto.