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Several additional public blockchains with smart contracts have emerged during the past few years, necessitating cross-chain interoperability in the cryptocurrency industry. Currently, industry engineers are putting a lot of effort into creating cross-chain architecture that enables communication across various blockchains.
Cross-chain bridges often referred to as blockchain bridges, are infrastructural protocols that link separate blockchain networks. They enable the frictionless transfer of digital assets from one blockchain to another, enabling interoperability.
The popularity of layer-one blockchains that are considered “alternative,” such as Solana, Avalanche, and BNB Chain, contributed to the growth of blockchain bridges. These alleged “Ethereum-killers” made an effort to steal customers and market share from the first chain of smart contracts.
Cross-chain bridging often entails using a smart contract to lock or burn cryptocurrency assets on the original chain before unlocking or minting them on the new chain. Smart contracts also handle the latter portion.
In other words, the majority of cross-chain bridges work by releasing tokens on different chains after “wrapping” them in smart contracts.
Wrapped Bitcoin or WBTC, an ERC-20 token that uses bitcoin as collateral, is a good example. Bitcoin must be locked on the Bitcoin network before being created on the Ethereum network using a cross-chain bridge in order for you to get WBTC on that network.
Users’ faith in “federation” or “custodial bridges” is the basis on which trust-based bridges operate. Something needs a federation of people or mediators to work because it is centralized by nature.
Trust-based bridges are motivated to keep the transactions going even though they are rapid and inexpensive for moving huge quantities of cryptocurrency.
On the other hand, trustless bridges are completely decentralized by nature because they are entirely powered by smart contracts. They operate much like actual blockchains, with individual networks each contributing to the confirmation of translations. They also offer more security during translations than the former did.
Although cross-chain bridges are a crucial tool for managing cryptocurrencies and digital assets, they are not without risk. Cross-chain bridges allow a significant boost to the capabilities of the blockchain network when used as intended. Cross-chain bridges can enhance the capabilities of blockchains, cryptocurrencies, NFTs, and more when paired with other smart-contract features.
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