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Crypto Terms:  Letter B
Jun 19, 2023 |
updated Apr 02, 2024

What is Bridge?

Bridge Meaning:
Bridge - a protocol that allows data transfer between two different blockchain networks.
2 minutes

Let's find out Bridge meaning, definition in crypto, what is Bridge, and all other detailed facts.

A blockchain bridge is a protocol that helps maintain a steady token supply between two different blockchains. Bridges bind two distinct blockchain protocols, allowing interoperability.

When one token is stored in a blockchain protocol, its equivalent can be minted on the second blockchain. This transfer occurs according to the mint-and-burn protocol.

One of the biggest challenges for blockchain-based technologies is their lack of interoperability. Each blockchain network functions independently from the other due to their decentralized nature. Some blockchains rely on different consensus mechanisms

Therefore, tools like decentralized apps (dApps) created on one blockchain, like Bitcoin, would not function on a different network, like Solana.

Developers find blockchain bridges particularly useful as it improves processing speed thanks to reduced traffic in the blockchains. A notable example is the blockchain bridge between Tezos (XTZ) and Ethereum (ETH) ecosystems.

A common way of creating interoperable blockchain protocols is by establishing wrapped tokens that are compatible between different blockchains. Wrapped Bitcoin (WBTC) is an ERC-20 compatible token that can be used on the Ethereum blockchain.

Although bridges are most commonly used between two different blockchains, in some cases, they may bind together a sidechain to its source blockchain. This may be required if the sidechain, also known as the child chain, utilizes a different consensus mechanism from its parent chain.

Axie Infinity is a decentralized game built on a sidechain of Ethereum known as Ronin. The sidechain was developed specifically to host the game and had to be bridged to the source blockchain so that the users would be able to utilize ERC-20 and ERC-721 tokens, the latter known as non-fungible tokens (NFTs)

Stablecoin protocols rely on bridges for their blockchains as pegged cryptocurrencies like Tether (USDT) are becoming increasingly popular. The primary focus is to increase the availability of stablecoins on exchange platforms built on different blockchain networks. It is expected that the bridge utilization for stablecoins will expand in the future.

The interoperability offered by blockchain bridges is beneficial to the users and blockchain communities. Developers can optimize their applications by utilizing interchain and sidechain bridges.

Bridges may offer different advantages based on the blockchains they connect. While some are focused on improving transaction speed, others can utilize several smart contracts at once.