Everything you need to know about Blockchain Bridges

8 min read
Everything you need to know about Blockchain Bridges

As the growth of cryptocurrencies and other digital assets like NFTs becomes more widespread, the need for reliable, strong blockchain bridges intensifies. A critical part of the crypto technology mix, they ensure that there’s an open and free trading environment for anyone that wants to invest in the space.

But what, exactly, is a “blockchain bridge” and how does it work?

What is a blockchain bridge?

In layman’s terms, a blockchain bridge facilitates allows a user to convert their token data from one blockchain to another. Typically, information cannot be transferred freely from one blockchain to another - they are incompatible with one another. A bridge provides a solution to this interoperability challenge.

Imagine that you’re standing at the edge of a ravine. You want to transfer a sack full of money from one side of the ravine to the other. It’s unlikely that you’re going to want to risk the strength of your throwing arm or lose your coins. Instead, you look for a bridge that will let you cross from one side to the other.

So, let’s say you want to send some Ethereum to the Polygon blockchain using a bridge. Normally the two blockchains that these assets are sitting on are incompatible with one another (that’s the “ravine” from our earlier hypothetical), so to facilitate the exchange, you need one more software application – the bridge. There are times where you’ll need to leverage more complex bridges - for example a cross-chain bridge - but by finding the right bridge, it is now possible for most tokens to be interoperable.

How do blockchain bridges work?

As mentioned above, a blockchain bridge allows the exchange of information between two blockchains that are otherwise unable to communicate with one another. To do this, a bridge undergoes several steps:

  1. A user decides that they want to transfer data from one bridge to another. For example, they want to move Ethereum to the Polygon blockchain. The first thing the technology does is verify and validate that the information on the host blockchain is valid.
  2. The bridge then does one of two things: either it creates an equivalent duplicate of the information on the new blockchain, or, alternatively, if the token uses the same standard on both blockchains (such as the ERC20 standard on the Ethereum blockchain), the tokens are directly moved to the new blockchain.
  3. The bridge then generates a proof of the transaction on the source blockchain. This takes the form of “wrapped” tokens, meaning that they can no longer be used on the original blockchain, but are linked to the assets on the new blockchain.
  4. The bridge then monitors the data on both blockchains to ensure that it remains consistent and valid.

This is, broadly, how most bridges work, though different bridges will have slightly different approaches to that process. There are a couple of different kinds of blockchain bridges. Some bridges are unidirectional, meaning that they can transfer assets from one blockchain to a second blockchain, but not the other way around. Alternatively, some bridges are bidirectional, allowing users to transfer assets either way.

Additionally, there are both centralized and decentralized bridges, depending on who controls the tokens that are used to create the bridged assets. Essentially all of these bridges work the same way, however. You’ll place your tokens into them, and the bridge will weave its magic and convert those tokens instantly into the new virtual currency for you. It’s designed to be a simple and hands-off process, much like the process of converting traditional money from one currency to the next.

What opportunities do blockchain bridges give blockchain users?

By far the most common use of that is for exchanging tokens.

Imagine conventional money for a moment. If you’re based in Australia, but want to buy something in Japan, you first need to transfer your Australian dollars into Japanese yen. Thanks to various systems that run in the back end of banks this can happen instantaneously and without any effort on your part. You input your credit card or bank transfer details, and the Japanese seller immediately receives the yen.

The biggest benefit of a blockchain bridge is that they offer that functionality to crypto users. Say you want to buy something on Ethereum, but you only hold MATIC on Polygon. This cannot be used on Ethereum, so you first need to use a blockchain bridge to convert your MATIC on Polygon to MATIC on Ethereum. Once done, you now have a supply of MATIC on Ethereum to use as you want to.

Before blockchain bridges existed, the only effective way to move assets between blockchains would be to use centralized exchanges. However, doing this meant that you would be placing your assets with a third party, and, given several high profile examples of centralized exchanges failing, many are uncomfortable doing this. Furthermore, leveraging centralized exchanges comes with fees that not everyone wanted to pay. Blockchain bridges represent a step towards the streamlining of decentralized digital currency, and an ease-of-use feature that makes it easier for newcomers to understand, too.

Trust-based vs. Trustless blockchain bridges

You may come across the terms “trust-based” and “trustless” bridges as you look further into the technology. These are simply synonyms for “centralized” and “decentralized” bridges. A “trust-based” bridge is a centralized bridge. You deposit your assets with a trusted third-party service provider, that will manage the exchange and return you the assets that now sit on the new blockchain.

“Trustless bridges” meanwhile, have no “middle man”. Rather, you have complete control over the process and exchange. Such bridges have been designed around complete transparency and claim to be the more secure option for users.

How to navigate blockchain bridges safely and avoid security risks?

Blockchain bridges, as with everything to do with crypto, do have a security risk attached to them. In fact, they’re the single largest security risk in the industry, with around 69 per cent of all stolen funds in 2022 coming out of bridges.

https://blog.chainalysis.com/reports/cross-chain-bridge-hacks-2022/

For now, there has been no perfect solution regarding the security vulnerabilities of blockchain bridges. Trust-based bridges are structured in such a way that you’re relying on the company behind it to follow best security practices and not be corrupt, go bankrupt, or mismanage your assets.

Trustless bridges, meanwhile, rely on the underlying code to protect the integrity of smart contracts and algorithms. There are examples of trustless bridges that have had large amounts of assets stolen out of them thanks to exploits in the code.

As with anything else to do with crypto, you need to take personal responsibility for your investments and make sure that you’re satisfied with either the integrity of the company (for trust-based blockchain bridges) or the coding and security credentials of the software (for trustless bridges).

Why are decentralized bridges important for blockchain?

For cryptocurrency to ever become a mainstream solution to money and, if not replace it, be a common way to pay for goods and services, then it’s going to be important that the overall “crypto system” becomes as interoperable as fiat currency.

Interoperability is something that we all take for granted with fiat currency. When someone travels overseas, they will go to their local currency exchange, hand some cash to the cashier, and instantly get an equivalent amount back in the foreign currency that they’ll need shortly. We can also deposit money into our bank account, and then use it across many different formats without a second thought. We can transfer money between accounts (and banks), pay for things using multiple different payment platforms, and withdraw the money if we need cash.

If we were unable to do that, because different formats of currency were incompatible with one another, or each bank had its own systems that couldn’t “talk” to other banks, the usefulness of fiat currency would be greatly reduced, to the point that people wouldn’t use it.

The same story is true of crypto. Crypto can never be a mainstream form of currency if a user’s ability to buy things depends on which crypto assets they hold. This means that interoperability between blockchains and tokens is a critical step for the industry to take.

At the same time, the dream of crypto is decentralization. As much as there are efforts to bring regulated exchanges into the space to spur growth and large-scale investments from corporations and fund managers, many, if not most of the people that want to own and use crypto as a currency are people who like the idea of having a form of money that is private and held entirely within their control. People want to own crypto because banks, financial institutions and governments wield too much control over fiat currency.

This is where decentralized bridges come in. They will literally bridge the gap between the desire for interoperability and the convenience that comes with the use of crypto as a currency, and the desire by people with crypto to maintain control over their assets.

How to choose a blockchain bridge provider?

Essentially, there are five qualities that you want to consider when weighing which is the right bridge provider for you. These are:

  1. Security: How secure are your assets going to be on a bridge? What are the chances of it being hacked (for a decentralized bridge), and how trustworthy is the company that will handle the assets (for a trust-based bridge)? Look for records of bridges being hacked and what the company did to address this, so it doesn’t happen again. Or look for an option of a non-custodial wallet that also has cross-chain bridge functionality, like Frontier. This ensures a much higher level of security because you’re storing your crypto where you are bridging it.
  2. Connectivity: How many different blockchains can you exchange assets on with this bridge? The fewer exchange paths, the more bridges you’re going to need to sign up for if you’d like to have all your bases covered. For example, Frontier has 6+ bridge providers to choose from.
  3. Extractable Value: What are the chances of flashbots or other intermediaries extracting a portion of the transaction?
  4. Performance: How does the bridge run? What are the costs, speed, and efficiency with which it completes transactions?
  5. Liquidity: Not all bridges can support unlimited crypto assets (in fact, few can), so does the bridge that you’re looking at have the capacity to handle the kinds of transactions that you’re looking for?

The only way to fully assess whether a blockchain bridge is right for you is to do your own research and try our bridges of your liking. The best way to do this is to spend time in crypto communities on Discord, Reddit and others to learn what the community’s experience has been with each bridge.

How can users bridge using Frontier?

If your wallet is hosted on Frontier, then you’re in luck because as part of the wallet service, Frontier offers a convenient, safe and secure cross-chain bridging solution. The Frontier solution offers six bridges (including Rango, Li.Fi, Dodo and others) that are selected for their security and reliability. When you’re looking to use a bridge, Frontier will recommend the best for your outcomes (you can choose to use another one if you’d like), and will then let you complete the bridge with minimal approvals. It’s fast, convenient and the best option for decentralized bridging.

Conclusion and summary

Blockchain bridges are a natural and critical evolution of the crypto sector. The interoperability that it brings to blockchains, to allow the seamless transfer of assets between them, was always going to be necessary to find ways to allow for seamless, instant, and low-cost transfers between blockchains and forms of digital asset. Thanks to the interoperability that blockchains pioneer, crypto assets behave more like fiat currency than ever, with all the convenience that entails. So, while there are real security issues with blockchain bridges, they are the solution to one of the greatest restrictions in crypto, as they become more secure, will become a cornerstone of the sector.


Want a non-custodial wallet you can trust? Download Frontier - The One Web3 Wallet that includes Crypto, DeFi, NFTs, and more. It enables your personal crypto journey with non-custodial security, fraud detection, and prevention mechanisms. Contact Us here to speak to our team/community, we’d love to hear from you!

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Yash Belavadi

Chief Product Officer (CPO) at Frontier Wallet. Entrepreneur building for a Decentralised World - Blockchain, Self-Custody, Crypto, DeFi, NFT, and more