Bridging Crypto Blockchain Divide
By Laxmikant Khanvilkar
The year 2022 was not just a disastrous year for Crypto, it also experienced its third Crypto Winter in over a decade.
Prices of leading cryptocurrencies nosedived, leaving investors poor by billions of dollars. In such an environment, it is obvious to find a crypto investor trying to lower costs related to crypto trade and try maximize returns.
One such tool is Crypto Bridge. In technical parlance, a crypto bridge (also known as a cross-chain bridge) is a tool that empowers an investor to transfer digital assets and information from one blockchain to another.
Interoperability has long been a pain point in blockchain technology. While highly powerful technologies by themselves, cross-chain data transfer can be tedious and expensive. It is difficult to break down the walls of the blockchain ecosystem.
However, with the help of crypto bridge, one can overcome this issue. Crypto bridges have emerged as a necessary tool. They offer many advantages. An investor can bridge tokens from one blockchain to another with lower fees and faster transaction times.
As a result of which, the possibility of losing any value is reduced while getting more from crypto. This is especially the case on the Ethereum network where fees are higher and transactions slower than scaling solutions like the Polygon network.
Blockchain bridges can also be useful in DeFi applications, allowing lenders and borrowers to convert tokens to their preferred blockchain.
Let us assume that an investor owns a BTC but want to use an Etheruem based project.
While there are plenty of BTC, the Bitcoin and Ethereum blockchains have completely separate rules and protocols. One can use a crypto bridge to gain access to an equivalent amount of ETH.
Cross-chain bridges don’t actually move BTC from the Bitcoin blockchain to the Ethereum blockchain. Instead, the bridge will create equivalent tokens that represent BTC but are usable on the Ethereum blockchain. Smart contracts are created to keep track of everything investor transfer and use.
While an investor could sell BTC and buy ETH on an open exchange, this would take more time and incur more fees than using a cross-chain bridge.
Bridging is likely to emerge as the most efficient activity to secure future of crypto. It can be confusing to learn of all of the new blockchains, scaling solutions and tokens popping up across the blockchain ecosystem.
Cross-chain bridges show that crypto world may be moving towards a more collaborative space emphasizing usability and mass crypto adoption.
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