The importance of blockchain bridges in the world of crypto!

Bridging connections – This is what Blockchain bridges do, and it is a protocol connecting two blockchains to encourage interactions. Blockchain is a Decentralized ledger technology that has introduced us to an immutable ledger for transaction recording, which is why businesses across the world are adopting it.

What is a blockchain bridge and how does it work?

The concept of blockchain bridges comes from the way physical bridges work to connect two points. Interoperability is the benefit offered by blockchain bridges that connect vastly different networks. Blockchain development in Kolkata and across the world is witnessing a change and new innovations are discovered. One such invention is a blockchain bridge that facilitates communication between two blockchain networks and assists with the efficient transfer of information and cryptocurrencies at the same time.

Types of Blockchain Bridges –

·  Federation bridges – It involves the locking of a certain amount of BTC

· Trustless bridges – It promotes a decentralized process and eliminates mediator

· Cross-chain bridges – It facilitates information exchange between blockchain networks

· Avalanche bridge – It is used to transfer digital assets between Avalanche POS blockchain and Ethereum

Blockchain bridges work by converting smart contracts and data transfer, however, the most common aspect or utility is token transfer. This type of bridge initiate interoperability between vast different networks like that Bitcoin and Ethereum. Using blockchain bridges Bitcoin users can transfer their coin to the Ethereum network and wrap an equivalent amount of wrapped BTC which is also an ERC20 token and is the right fit for the Ethereum network.

What is the need of using blockchain bridges?

There are many benefits of connecting and interlinking different blockchain networks. Some of them can be showcased as –

·  Efficient blockchain transactions:

The blockchain network where the token is wrapped converts itself into a faster and cheaper version of itself than it was in the former blockchain. Let’s say – the high gas fees and slow transaction speed on the Ethereum blockchain demotivates crypto users to join the decentralized finance ecosystem, but wrapping the same asset and being ported to another blockchain change the entire picture.

·  Liquidity in place:

ERC20 tokens can be transferred efficiently with minimum gas fees on the layer 2 blockchain like Polygon which is built over the layer 1 Ethereum blockchain. The token transfer happening in the network is completed without damaging the underlying Ether that is being wrapped.

·   Interoperability:

The Defi service is made accessible and to be hosted on other blockchains with the process of token wrapping. The greatest ever example can be the Orca service that is being hosted on the Solana blockchain and can be accessed using the wrapped Ethereum (WETH).

·  Scalability:

Blockchain networks with high transaction volume can be relieved by blockchain bridges by offloading some load from the parent blockchain with the token wrapping process. This liquidity in the network is not compromised and the power of efficient chains is effectively harnessed as well.

Concluding up, blockchain technology has helped us understand what decentralization is and this also helps prioritize the technology over any other form of operative improvement. Blockchain bridges can establish strong Blockchain connections, and with such an innovation we are inching towards an innovative and normalized crypto economy.