Blockchain Bridge

Have you ever been wondering, if it is possible to connect two different blockchains?

What is meant behind this term? Let’s assume that user wants to participate in DeFi, but he only owns bitcoin and do not want to sell it. Bridge allows that.

Agenda:

• Intro,
• Definition,
• Why bridges are needed,
• How bridges work,
• Example,
• Conclusion.

Definition

Easily said, blockchain bridge is an protocol which enables to interact between two economically and technologically separated blockchains.

To better understand how this bridges works and even why is it needed, every web3 adept should know very basics about blockchain structure. More details in my material below:

Why bridges are needed?

Before jumping into explanation how bridges works, it should be explained why are they even needed.

Blockchain bridges are critical in connecting two communities of different ecosystems and also allow transfers between them.

Bridges break out differences between protocols of separated networks, it means that it is possible to use features of multiple ecosystems. By developing bridges technology, decentralization is more functional.

How bridges work?

Let’s assume that somebody wants to transfer bitcoins to ethereum network. It is possible by:

• selling bitcoins on exchange,
• purchasing ethers.

However, this method will endanger user for extremely high fees.

Alternatively, it can be achieved by another method, which uses bridges.

When user bridges one bitcoin to ethereum wallet, blockchain bridge smart contract locks bitcoin and create equivalent amount of wrapped bitcoins (WBTC).

Wrapped bitcoin is an erc20 token standard, which is compatible with ethereum ecosystem. Wrapped token i tocenized version of cryptocurrency which value is pegged to the assets it represents and can be redeemed (unwrapped) anytime.

Example

Let’s analyze above explanation from user perspective.

Flow is very easy, it requires transferring bitcoins to presented address of bridge deposit. Next, bridge sends an equivalent of assets in chosen network’s native currency.

Converting back is pretty easy, it goes through reverted process.

Conclusion

Blockchain bridges are crucial in more complex development of decentralized platforms, systems. It is like cooperating on big scale with top ecosystems and exchanging with functionalities without additional fees.