Ever since new blockchains started popping up after the creation of bitcoin’s blockchain in 2008 there has been a prevailing problem and that is a lack of interoperability so there’s always been a need to solve this problem to ideally make the whole crypto ecosystem work as a team instead of existing like islands and having the ability to move your assets to different blockchains, means that you get to enjoy the benefits that may be native to certain ecosystems.
What is Blockchain?
In general, blockchain is a decentralized and distributed digital ledger for recording various transactions made across many computers in a network. A new record of a transaction is added to every participant’s ledger at the occurrence time of that very transaction. Each block is composed of different transactions. The decentralized nature of the blockchain networks ensures transparent and secure information sharing within a business network.
Blockchains are designed to be resistant to data modification, ideally for the recording of event logs, medical records, identity management, transaction processing, provenance tracking, and voting. The technology is currently being applied in different industries: financial systems, supply chains, health systems, and governmental operations. Blockchain can potentially revolutionize our ways of interacting and doing business in the continually growing, changing digital world.
What Are The Benefits Of Blockchain Bridges
So let’s have a look at some of the Benefits of blockchain bridges:
- First benefit is that you may be able to enjoy cheaper and faster transactions, so let’s say you have eth on the ethereum network which has its own flaws like high transaction fees and slow throughputs so you could choose to move your assets through a bridge to polygon which is much faster and also cheaper so by moving your eth to polygon you get to save money by trading tokens for a fraction of the cost you would incur on the ethereum network.
- Second benefit that comes with blockchain bridges is the ability to explore the blockchain ecosystem, because this allows you to enjoy products like decentralized applications or dapps that only exist on other blockchains so for example orca is a d5 protocol that is only available on solana and supports a wrapped version of eth.
If you find interest rates or products offered in the orca protocol appealing you may decide to port your eth to solana through a bridge to enjoy the benefits offered by the protocol and this could also be the case for protocols that exist on multiple blockchains like the popular lending protocol ave so say you’ve been using ave on ethereum to land usct but notice that the interest for the same coin on polygon is higher well then you may choose to move your assets to polygon and take advantage of the higher interest there.
- Third Benefit of blockchain bridges is the ability of scalability just like users developers that create products on the ethereum network have had negative experiences due to the fees and speed so you might ask well why do they choose to build there in the first place well since ethereum has been there for a longer time than its competitors there is a factor of network effects this is when a product.
In this case ethereum becomes more valuable when more people use it and many people using it there comes liquidity which is a measure of how easy it is to convert one asset to another but now with blockchain bridges developers don’t have to trade off these important benefits for speed and lower transaction costs by building on a different chain as users can easily move their assets from the original chain to other block chains where the same tokens can be processed faster and at a lower cost.
How do Blockchains work?
We can understand how do blockchain work using a practical example, say Sanjoyti has her assets on ethereum but she wants to try out soland a lending and borrowing platform on Solana so Sanjoyti will need to transfer her eath to solana through a bridge so the bridge may lock the three eth on ethereum and mint new ones that can run on solana.
So as you can see the total number of circulating eats remains constant because while the three eats will still be on ethereum they will be locked, so that the equivalent number of eats will be available for marine on solana. Now after some time if Sanjoyti wants her original eath back through the bridge she will burn her salon compatible each to release her locked ease.
So now that you have the full picture of the whole process you’ll notice that the eth isn’t actually moving right it rather it gets locked and you get access to a similar amount that is compatible with another chain now also while different bridges have similar functions what happens in the background might differ depending on the mechanism.
