A beginners guide to crypto bridge
Are you new to crypto bridges? Discover what crypto bridges are and why they are crucial for seamless and faster transactions.
A beginners guide to crypto bridge
Crypto bridges work similarly to bridges in the physical world wherein it connects two blockchain ecosystems. With crypto bridges, you can transfer your digital assets and data from one blockchain to another.
What’s great about crypto bridges is that it allows blockchains to complement one another. For instance, other networks can fill the gap left by Bitcoin's failure to reconstruct its blockchain to support smart contracts. Crypto bridges also make it possible for programmers to coordinate their efforts across different networks to bridge crypto. Simply, it allows protocols to share features and expand upon one another.
How does a crypto bridge work?
If you are wondering how to bridge crypto, as mentioned, crypto bridges connect one blockchain network to another. This is among the reasons why it offers a wide range of uses, token transfer is by far the most popular.
A perfect example of how crypto bridges work is where Bitcoin users can perform actions using their coins on the Ethereum blockchain. This may involve making low-fee payments or buying a variety of ETH tokens.
Note: To transfer tokens from one network to another, crypto bridges use smart contracts and generate a new token with the same value on the receiving network.
Why are crypto bridges important?
Each blockchain functions separately which means that their networks all have different consensus processes and regulations. This means tokens cannot freely migrate between blockchains and interact with one another in their native form.
With crypto bridges, blockchains can be linked together which facilitates easy exchange of data and tokens between them. Aside from these, other benefits of crypto bridges include:
- Lower transaction costs
- Gives chance to on above crypto assets
- Access dApps on other blockchains
- Helps you easily explore different blockchain ecosystems
Types of crypto bridges
There are various crypto bridges with different functions to cater to every crypto user’s needs. Depending on what you want to focus on, choosing the right crypto bridge can help you achieve your goals much faster.
Here are some of the best crypto bridges and how they work:
Trusted bridges
Trusted bridges rely on a trusted authority or network. To ensure a smooth and secure exchange of information and currency, they employ third-party verifiers. However, with trusted bridges, you’ll have to give custody of your crypto assets to the exchange.
Trustless bridges
Trustless bridges remove the need for third-party operators to bridge one blockchain to another. Instead, they use smart contracts to handle transactions between blockchains in a decentralised fashion. Unlike trusted bridges, trustless ones do not require you to allow access to your digital assets.
Bi-directional bridges
Assets can be moved in both directions across a bi-directional bridge. This type of crypto bridge makes it easier to send encrypted data between networks. This could be more practical for a user that routinely sends and receives encryption through two distinct networks.
Uni-directional bridges
Uni-directional also known as one-way bridges allow you to transfer crypto to a different network without the option of sending it back over the same path. This means that you can only send one-way transactions to secure your data.
Popular crypto bridges you should consider
Just like crypto wallets, blockchain bridges come with different varieties for every type of crypto user. With the variety of crypto bridges to choose from, it’s easy to find one that suits your needs. This is whether you want a one-way bridge for utmost security or a trustless bridge to solely handle your assets.
To help you find the best crypto bridge wallets, here's a list:
Polygon Bridge
The Polygon team released the trustless Polygon Bridge in early 2020. The bridge is designed to help facilitate exchanges between Polygon (MATIC) and Ethereum (ETH). Polygon Bridge allows the exchange of ETH and MATIC tokens as well as non-fungible tokens (NFTs). This lets you take advantage of ETH's various uses while still using MATIC for its lower fees and faster transactions.
Solana Wormhole Bridge
Wormhole is a two-way connection that uses Solana's speed and low transaction fees to make it easier to transfer tokenised assets between blockchains. With Wormhole, SOL aimed to address problems with DeFi such as excessive petrol expenses, pricing slippage, and network congestion.
In 2020, Solana Wormhole Bridge was released as a decentralised link between ETH and SOL, bridging the gap between ERC-20 tokens and the Solana Protocol Layer. To boost transactions, there are now 17 different blockchains that can transmit data with one another because of the Solana Wormhole.
Since developers can use Wormhole to connect to the SOL network, a crypto project doesn't have to rewrite its coding from scratch to support SOL. The bridge relies on cross-chain decentralised oracles which are services that help bridge data across different blockchains. So-called ‘guardians’ are responsible for moving tokens from one blockchain to another by storing them securely, deleting them, and then minting or releasing tokens on a different blockchain.
Avalanche Bridge
Avalanche Bridge (AB) is a two-way bridge developed by Ava Labs and released in July 2021 with a focus on serving retail customers. The Avalanche-Ethereum Bridge (AEB) has been replaced with this new bridge design, which offers fees around five times lower than the old design.
AB works to enhance the asset-bridging experience for consumers by reducing costs, speeding up transactions and enhancing security. The bridge also facilitates the transfer of ERC-20 tokens from ETH to the Avalanche Mainnet.
When transferring tokens from Avalanche to Ethereum, the enclave verifies that the wrapped ERC-20 coins are burnt before the corresponding amount is transferred to ETH. When the exchange is complete, the token is either destroyed after being minted or deleted before being issued.
Crypto bridges are proof that blockchain technology is ever-evolving and improving to continuously provide both investors and casino players with the crypto best experience when betting at sites like Gamdom.
Words by: Rica Miranda
