The most common issue blockchain users face is the inability to work together. Blockchain bridge or cross-chain bridge is adapted to connect the two blockchains. It helps the users to do transactions between two different blockchain networks. Blockchain technology revolves around the concept of decentralization. This feature ensures that several stakeholders can own and operate the network, which is impossible with the conventional and centralized governance model. It will also affect the wide range of services, like with Defi, it will increase the liquidity and communication across communities.
Role of Blockchain Bridge:
The term blockchain bridge can be described as a connection between two chains that allow the transfer of arbitrary data and tokens. This bridge is compatible with the two bridges’ different rules, protocols, and governance models and ensures secure interoperations for both blockchains.
Blockchain bridges help perform many functions like smart contract conversion, data transfer, token transfer, etc. For example, Ethereum and Bitcoin are two popular and major cryptocurrency networks. Both these networks have different sets of protocols. With the help of the blockchain bridge, the Ethereum network permits bitcoin users to transfer their coins, buy Ethereum tokens, low-fee payments, etc.
In this transaction, the blockchain bridge holds the bitcoins and creates an equivalent amount of ETH for the sender. There is no actual transfer of cryptos from one protocol to another. A smart contract locks the number of bitcoins and gives access to an equivalent amount of ETH. The reverse process happens when the investor converts back its bitcoins. The remaining ETH gets burned, and an equivalent amount of bitcoins is returned to the wallet.
Blockchain Bridges: Trust-Based Vs. Trustless
Centralization is one of the implicit drawbacks of the blockchain bridges, as users give control to their coins if they want to convert to other cryptos. Even though Trust-based blockchain bridges are an economical and faster option for transferring a large pool of cryptocurrency, the availability of reliable services is minimal. Using less-known brands can increase the associated risk.
Whereas Trustless or decentralized blockchain bridges are safe options for the users. These bridges act as a blockchain with separate networks to validate transactions. In this case, the trust is based on the mathematical calculations built in the code. Many computer codes work simultaneously to reach a common agreement.
Benefits of the Blockchain Bridge:
1. Interoperability is a significant advantage of the blockchain bridge. Other benefits are as follows.
2. Improvement in Scalability: Sometimes, it becomes difficult to handle many transactions. The number is increasing rapidly with applications to register on blocks for large blockchain networks.
This transaction volume might result in delays and ultimately hinder operations. With the adoption of some sidechains, blockchain bridges can lower the pressure on the single blockchain platform as users can transfer the tokens from one blockchain to another.
For Example, PolyBridge is a blockchain bridge developed by Poly-Network that supports Ethereum, Ontology, Neo, Bitcoin, Zilliqa, Binance Smart Chain, Huobi ECO Chain, Elrond, Bitcoin. Dapps built on the Binance Smart Chain (BSC) can transact with ERC 20 tokens using this bridge.
3. Faster Instant Payments: Interoperability can increase the acceptance of cryptocurrencies as a form of payment. Only some stores accept payment in Bitcoin. With the adoption of bridges, the users can make instant payments in Bitcoin at the point of sale.
4. Beneficial for smaller blockchains: Blockchain bridge is helpful for the growth of the small blockchains. With the use of bridges, the users can transfer the tokens to comparatively unpopular networks that might have lower costs. For the development of the crypto ecosystem, blockchain bridges are beneficial.
Popular Blockchain Bridges:
1. AnySwap: AnySwap is a blockchain-based, peer-to-peer, global trade platform that provides instant and secure trading of cryptocurrencies. The platform uses a unique mechanism called the AnySwap system, which allows traders to exchange one cryptocurrency for another of their choice, with the option to trade instantly at the current market price.
The system is powered by the AnySwap network, a decentralized exchange that uses the Swap Token as a medium of exchange to allow traders to trade from anywhere. The Swap Token is an ERC20 token used to pay transaction fees on the AnySwap exchange and is also used to pay for the services provided by the AnyPay teams.
2. Binance Bridge: Binance Chain is a blockchain bridge that provides instant blockchain service worldwide. By using Binance Chain, users can access a wide range of blockchain-based services, such as decentralized exchanges, cross-chain decentralized payments, and more, on a single network.
Binance Chain is designed to enable a wide variety of developers to build services on it, unlocking up a spectrum of possibilities for the future of blockchain. Binance Chain is also a decentralized exchange (DEX), meaning it doesn’t require any third party to operate.
3. CBridge: C Bridge is a blockchain bridge connecting the world of cryptocurrencies and traditional finance. It is an open-source, decentralized protocol and network built on the NEO platform to provide a unique digital asset transaction platform. It offers several features, including decentralized exchange, payment platform, and oracle services.
C Bridge is developed to bridge the gap between the digital world of cryptocurrencies and traditional finance’s digital asset exchange and trading systems.
Conclusion: Decentralization has always been a critical feature of blockchain.
Therefore, it takes precedence over other operational enhancements like scalability. Naturally, developers are wary of significant modifications, fearing that they would stray from the decentralizing principle. Bridges built on the blockchain show that they’ve moved past that mindset. We may be making headway toward a more creative and normalized crypto economy, but any development is preferable to remaining stuck in the status quo.
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I have read your blog, it was excellent and informative. decentralized blockchain app development requires easy engagement and interoperability. Interoperability refers to a blockchain’s ability to communicate with other blockchains with the same underlying architecture to promote information sharing. To learn how blockchain bridges connect, share data, and move assets in the blockchain ecosystem and how they provide interoperability. Continue reading here https://blockchain.oodles.io/blog/blockchain-bridges-cross-chain-interoperability/
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