update 1 September 2021

A Complete Guide On Blockchain Bridges – How Do They Work

Since the launch of the first blockchain-based system, many others have followed, and the crypto industry has continuously grown. However, blockchains aren’t similar and come with different strengths and weaknesses. For example, Ethereum, which was launched in 2015, has excellent smart contract advantages but has had severe scalability issues over the years.

All the blockchains, though, face a lack of interoperability challenges. Is there a possibility of having a system that allows users to use the strengths of different blockchains at the same time? In recent years developers have been introducing systems that help improve user experiences in blockchains and DApps. These systems include blockchain bridges that allow users to access services from different blockchains while maintaining their asset value.

Blockchains bridges help in the interoperation of different blockchains. Therefore, users can use Ethereum while they still enjoy other advantages that Bitcoin gives. Let’s look at how blockchain bridges operate, the benefits they present, and some existing examples.

How Do Blockchain Bridges Operate?

A blockchain bridge provides a link between two blockchains. The blockchains can then transfer tokens and data between the ecosystems through the connection created. It is essential to keep the supply of tokens constant across all platforms. 

Therefore, bridges use a mint-and-burn protocol to help ensure this. Once a token leaves one ecosystem, it is burned and locked. In the opposite blockchain, an equivalent token is minted.  

The operation of blockchain bridges can be split into two significant operations methods; federated bridges and trusted bridges. 

For federated bridges, the projects first set a threshold. Anyone who is looking to become part of the federation managing overseas must first meet the established qualifications. Trustless bridges, on the other hand, allow anyone to be an agent. The agents are commissioned to make sure proper validation of bridge transactions is done. Syscoin bridge, for example, uses agents who earn fees from ether related bridge transactions.

Benefits Of Blockchain Bridges

Blockchain bridges solve Ethereum scalability challenges. They do this by reducing the bandwidth traffic on Ethereum and dispersing it to other less congested blockchains. The linking blockchains gain full acceptance from the users of their interoperating systems.

The bridges allow instant payment at the point of sale, especially for highly trafficked blockchains like bitcoin and Ethereum. The above can also be used by DApps that need immediate settlement, giving the best user experience like Casino gamers. 

Users using Ethereum also suffer slow speed, but they can enjoy faster services with the introduction of blockchain bridges. Also, other blockchains linking with Ethereum may enjoy the smart contract advantages of Ethereum. 

Disadvantage Of Using The Bridges

For ether connecting bridges, the users are exposed to vulnerabilities that come with the use of ether smart contracts. These include reentrancy attacks, gas limit attacks, and DOS attacks. 

3 Best Examples of Blockchain Bridges

Syscoin Ethereum Bridge

This bridge allows the transfer of sys and sys assets from syscoin blockchain to Ethereum blockchain and back. It uses cryptographic proofs between the two blockchains to allow for token interoperability in a trustless bridge. Also, burn, and mint protocols are used to ensure the safe transfer of token to and from the syscoin network.

The ERC-20 projects face bandwidth limitations and high costs, but now with the syscoin Ethereum blockchain, these tokens can easily cross into the syscoin ecosystem and take its advantages. The ecosystem with the Z-DAG network can be able to process 60 thousand transactions per second. The above is faster than credit cards and network visas processing. Therefore any assets passing through this system will get the speed and low charges advantages. Syscoins and its tokens will get the benefits brought about by ether’s smart contracts and the e-wallets.    

RSK-Ethereum Blockchain Bridge

This bridge allows assets to move between Ethereum and RSK, which is powered by bitcoin, thus providing interoperability between Ethereum and bitcoin. That enables users to cross RSK and ERC 20 tokens between the two networks and uses the federation to take the event’s information or transaction to another chain. The moment more than half of the federation has taken a vote for the transaction, and the other chain creates tokens called ERC 777 of the exact amount locked on the other chain to the address account that sent the tokens in the original chain. 

The interoperability is an advantage to bitcoin users since they are allowed to cross their BTC to RSK, and thus they get the smart contract advantage of ether. Also, since bitcoin and ether are the two largest digital asset platforms, bitcoins can easily take advantage of the interoperability between RSK and Ethereum to purchase ether assets. RSK is still planning to increase the strengths of this token bridge to be fully decentralized and trustless.  

Wanchain Interoperable Platform

Wanchain uses some form of atomic swaps to allow for the linking of transactions to the Ethereum blockchain. Wanchain’s group of specialized nodes known as storemen locks some amount of ether on the Ethereum blockchain, preventing it from being spent using secure multiparty computation. This happens by sending the ethers to an unknown private address, thus protects it from being destroyed and used.

The ether in the unknown address becomes a mapping token on Wanchain. However, if the user wants to transfer it back to ether, the mapping token is burnt, and a threshold scheme is used to unlock the original ether. In this case, a certain amount of storemen nodes must provide part of the unlock key. 

Author’s Note

The ever-growing number of blockchain-based currencies has made it essential now more than ever to address the interoperability issue. Blockchain bridges which most were introduced at the start of 2020 are creating the interoperability platform. 

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Bitcoin users now have a platform that allows them to use ether smart contract advantages. Also, with the increasing number of ether transactions, Ethereum will take advantage of the syscoin, which offers faster transaction processing at a lower price. Due to the rising advancements in crypto technology, it is possible that very shortly, we will have an integrated system for all cryptocurrencies.

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