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- 1 The rise of many blockchain networks made interoperability a big issue for crypto users.
- 2 Crypto or blockchain bridges help different blockchain networks interact with each other seamlessly.
- 3 They have not just solved the issues but also paved the way for new possibilities.
The blockchain space began with just one cryptocurrency. Today, a multitude of networks exists and their number is rising steadily. All the mechanisms have brought some unique attributes and established their user base. However, the existence of many networks has given rise to another major issue, interoperability. Crypto users faced issues in transacting assets from one blockchain to another. To solve this issue, developers came up with the crypto or blockchain bridges.
Delve Deeper Into Crypto Bridges
As the name suggests, crypto bridges establish a link between different blockchains. They are software protocols that enable two distinct networks to collaborate seamlessly. Since the number of blockchains is rising, blockchain bridges have emerged as a highly useful tool. In the last few years, the rate of their adoption has also increased.
Today, they are being implemented in supply chain management, healthcare, finance, and many other domains. Their implementation takes place in different ways depending on the nature of the blockchain. Some use trusted intermediaries to facilitate the exchange of information while others use more sophisticated solutions. These could be decentralized technologies like cross-chain smart contracts and atomic swaps. They efficiently execute trustless communication and asset transfers as well.
A Sneak-Peek Into Their Working
Blockchain bridges typically use smart contracts to connect two different networks. The process involves a sequential relay of assets from one chain to another. At the same time, the smart contracts create tokens for various purposes. Furthermore, they simplify the creation of decentralized applications that pave the way for new financial systems.
A Step-by-Step Transfer of Assets Using A Crypto Bridge:
1. The first step involves sending assets from Blockchain 1 to the smart contract on Blockchain 1.
2. Next, the smart contract on Blockchain 1 locks the assets. Simultaneously, it forges a corresponding token on Blockchain 2. The token denotes the locked assets.
3. Blockchain 2 lets its users use the assets created by Blockchain 1.
4. If users wish to send the assets back to Blockchain 1, they can use the smart contract on Blockchain 2.
In this scenario, Blockchain 1 and Blockchain 2 could be two different protocols. For example, 1 could be Ethereum and 2 could be Polygon. The developers can leverage assets from multiple blockchain networks using bridges. As mentioned above, this action helps in creating new ecosystems.
Different Ilks of Blockchain Bridges
Blockchain bridges can be categorized into certain types based on their functionality and nature. All of them offer distinct advantages and increased communication abilities. They also explore advanced decentralized solutions and optimize the transactions. These overarching bridges impress users and businesses with their capacity.
- Trusted Bridges
- Trustless Bridges
- Federated Bridges
- Hybrid Bridges
- Layer-2 Bridges
- Interoperability Bridges
- Liquidity Bridges
- Pegged Bridges
- Atomic Swaps
Conclusion
Crypto or blockchain bridges widen the possibilities of decentralization with heightened interoperability. They make the transactions faster even if the two parties are using different networks. With them, the cryptocurrency becomes more adaptable and viable. It can cater to a wider audience in various industries with this solution.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
