What is a Blockchain Bridge?

Published Jul 12th, 2022
Updated Mar 20th, 2023

A blockchain bridge allows users to transact cryptocurrencies across different blockchains.

A blockchain bridge, also known as a cross-chain bridge, is a protocol that creates a connection point between two blockchains, thereby allowing users to transfer tokens or other data from one blockchain or network to another.

This process, whereby to separate networks are able to connect and interact with one another, is referred to as ‘interoperability’. It is a way of transferring cryptocurrency to users on different platforms through a process of tokenizing the cryptocurrency.

What this means is that the blockchain networks allow for the cryptocurrency of another blockchain to be represented as a token on the other blockchain.

For instance, if a HODLer wants to send Ether (ETH) to the Solana network, they will be able to do so through the bridge acting as a second layer between the networks. As the Ether is sent to Solana, it will not actually leave the Ethereum blockchain. Instead, a contract will be created by the bridge on the Ethereum platform and the Solana platforms, which will cause the designated ETH will be locked in a special e-wallet and become unusable on the Ethereum blockchain. This data will then be transferred to the Solana network, which will create tokens ETH tokens on the Solana blockchain.

Each token is recognized on the Solana chain as having a 1:1 value for the Ether that has been locked for this purpose on the Ethereum blockchain.

Each token is called a wrapped Ether (wETH.) The user can then use those tokens as though they were actually ETH on the Solana chain.  It is only once the ETH tokens are transferred back to the Ethereum blockchain that the ETH that was locked will be usable on-chain again.

Other types of data that can be transmitted through blockchain bridges include smart contracts and collecting and transmitting off-chain data.

Advantages of Blockchain Bridges

Although public blockchains are decentralized, they are still self-contained, and access is limited to the nodes that are actually connect to that particular blockchain. Therefore, direct transactions between blockchains are not possible between chains. For instance, if one party wants to purchase Bitcoin (BTC) from somebody else in exchange for ETH, they will not be able to so from chain to chain, because the blockchains are not connected. They would therefore require an intermediary such as a cryptocurrency exchange platform to conduct the transaction. However, these exchanges are usually expensive and time-consuming.

On the other hand, transactions performed on decentralized networks, such as Polygon, are usually significantly cheaper than on native blockchains. They also enable the HODLer to utilize their crypto off-chain, meaning that they will be able to utilize Ethereum-based dApps with BTC or Dogecoin (DOGE) instead of needing to buy ETH or the dApp’s ERC20 token.

Disadvantages of Blockchain Bridges

There are higher changes of there being bugs or weaknesses in the connecting protocols of a bridge than with a blockchain. In fact, most hacks that occur are perpetuated by taking advantage of third-party exchanges such as the Mt.Gox, and the recent hack of the Ronin Network bridge platform.