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What are blockchain bridges and why they might be a thing in the future?

Building bridges

One of the main problems with blockchains is the insufficiency of two blockchains working together. If an application is built on one blockchain, it can’t enjoy the benefits of other blockchains. To soften this issue, and ultimately solve it in the future, blockchain bridges have been brought into existence. What are they and what are they used for now and what could they possibly mean for blockchains in the future? 

Blockchain bridges are interconnected links that enable interaction between two blockchain systems. By enabling communication and interaction between networks, it allows applications to use the benefits of both systems, not only their own platform. Any data, tokens and information can also be transferred between platforms via blockchain bridges.

Bridges use mint-and-burn protocol to keep token supply constant across all platforms. When a token leaves a blockchain, it is burned or locked, and an equivalent token gets minted on the opposite blockchain. When the token moves back to it’s previous network, the token that was minted on the opposite blockchain, gets burned or locked. This means that the transfer never literally takes place.

Let’s explain minting and burning of assets quickly:

Burning a token means eliminating it by sending it to an eater address, which is not accessible by anyone. Whenever assets such as tokens or coins are burned or locked, they do not get eliminated per se. Instead, they are quarantined, never to be accessed by anyone ever again. These assets are effectively taken out of the total supply. Minting is the creation of a new asset – coin or token. If more assets are minted than burned, their total supply will increase, resulting in the drop in prices. If more assets are burned than minted, an increase in demand will occur and the prices will go up.

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Trustless and federated bridges

As we know, blockchains can be either public or private. Bridges are also divided into two categories: trustless and federated blockchain bridges. 

Trustless bridges work pretty much like public blockchain networks. Anybody can join any public network without permission from anybody. Trustless bridges operate through a decentralized network of agents. Anyone can join the network as an agent and, like miners in public blockchain networks, are incentivized to ensure bridge transactions to be validated correctly. 

Federated bridges on the other hand are similar to private blockchains. The federation sets certain criteria or demands that users have to meet in order to use them. A good example is the Wanchain blockchain bridge, which connects multiple isolated blockchains and allows the flow of digital assets and data between them.

The main benefits of blockchain bridges and the future

Let’s take a dApp on Ethereum blockchain as an example. Ethereum gives the dApp its benefits of ERC-20 token standards and its smart contract functionality, as well as its vibrant developer/user community. These are the main benefits of Ethereum. But what about Ethereums lack of scalability, slow speed, traffic congestion and high fees? 

Bridges allow dApps to be executed on Ethereum and use its smart contract functionality and ERC-20 token standards, but have its transactions executed on another blockchain, to avoid its slow transactions and high fees etc. By combining networks, dApp can take advantage of the benefits of different blockchain networks.

There are several released versions of blockchain bridges out there. The Syscoin-Ethereum bridge enables trustless interoperability of Ethereum and Syscoin and was released at the start of 2020. RSK bridge allows assets to travel between RSK and Ethereum. As RSK operatates on the Bitcoin blockchain, it effectively introduces the interoperability of Bitcoin and Ethereum. 

One of the earliest projects in the bridge scene was Wanchain. In the start of 2020, Wanchain introduced the T-Bridge framework, which enables transfer of digital assets and data between blockchains.

It is inevitable that some implementations of bridges have been experiencing issues. In May 2020 for example, a Bitcoin-Ethereum bridge called tBTC was shut down only two days after its launch because developers discovered a major bug in its code that made its continuation impossible.

The development of blockchain bridges is still making its baby steps and will probably take considerable time to grow. It is clear however, that blockchain bridges will play a major role in the future of the blockchain universe.

Interested in cryptocurrency and it’s future? Keep an eye on our blog and sign up for a free account in SwipeX Cryptocurrency Exchange https://swipex.com/.

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