A blockchain bridge (aka cross-chain bridge) connects two blockchains and allows cryptocurrency to be transferred from one chain to another. Tokens, smart contracts and data exchanges — including other feedback and instructions — between two independent platforms.
The downside to blockchain bridges is centralization. Users must give up control of their coins in order to convert them to other coins, essentially placing trust in something other than the system, itself. This incurs risk by going opposite of the concept of "trusting the system over those who use the system."
However, trust-based bridges are fast and an economical. If you want to transfer a large amount of crypto, but the pool of reliable services is rather small, then this might be a good option. But, it requires you to know and trust the proprietor of the bridge you're using.
There are decentralized, trustless bridges that intend to make users feel safer. These solutions operate just like an actual blockchain with individual networks pitching in to validate transactions. The problem with decentralized bridges is the service is freelance-based. That can be a liability when incidents happen since they’re only paid to process your request and not to fix them.
Why we need them
One of the biggest problems of blockchain was the inability to work together. While fluid and somewhat efficient as single entities, each blockchain is limited by the walls of its own domain. Most often this can lead to high transaction costs and congestion.
Blockchain bridges solve this problem by enabling token transfers, smart contracts and data exchange, and other feedback and instructions between two independent platforms.
These blockchains mint different coins and operate on different sets of rules; the bridge serves as a neutral zone so users can smoothly switch between one and the other. Having access to multiple blockchains through the same network greatly enhances the crypto experience for most of us.
This concept is a lot similar to Layer 2 solutions even though the two systems have different purposes. Layer 2 is built on top of an existing blockchain so while it does improve speed, the lack of interoperability remains. Cross-chain bridges are also independent entities that don’t belong to any blockchain.
The Dangers of Using Bridges
Security is one of the basic dangers of any new technology — especially one that boastsBridges are the focus of hackers because they present a the weak links in the blockchain platform. Most breaches of the crypto security has been through bridges. Poorly designed bridges can allow breaches to leak into one or both sides of the bridge — thereby, compromising the blockchains.
In January, 2022, attackers stole $80 million worth of cryptocurrency via the Qubit Bridge. In February, attackers stole $320 million via the Wormhole Bridge; and, a few days later, $4.2 million via the Meter.io Bridge. In the first week of August, 2022, Ronin disclosed a breach in which attackers made off with $540 million worth of Ethereum and USDC stablecoin. In all of these attacks, hackers exploited vulnerabilities in blockchain bridges.