As 2022 draws to a close, more and more individuals will be able to take advantage of Web3’s breakthroughs and enter a whole new world of digital commerce and cutting-edge infrastructure. There is, however, the inherent danger in expanding into the uncharted technological territory. Cross-chain bridge security has been particularly vulnerable to this threat.
Blockchain technology still has a long way to go before it can achieve full interoperability, in which different networks can easily interact with one another and collaborate. Cross-chain bridges have arisen as an alternative to achieving real blockchain interoperability in order to transfer assets across networks.
Understanding the operation of cross-chain bridges
In brief, a bridge tokens allows a user with a token X on Network A to use that token in an application on Network B, where the protocols and technology are fundamentally different and the token cannot be used in its present form.
In order to address this problem, the following actions need to be taken:
To access both networks, the user must first connect to a cross-chain bridge.
The number of Token X the user wishes to transfer to Network B is deposited by the user.
The bridge “wraps” Token X into a form that is compatible with Network B.
The following is a list of the methods in which the token is enclosed by a cross-chain bridge:
The user’s Token X is stored in a cold storage vault on Network A, and a new token is created on Network B in the same quantity to represent the locked tokens.
With this method, the user may take use of Token X on Network B without having to switch to a token that is exclusive to Network B.
The Value of Cross-Chain Bridges
Other blockchain networks that are part of Web3 such as Avalanche (AVAX), Arbitrum (ARB), and Polygon (MATIC) also have their own decentralized cross-chain bridges that make it easier for users to move funds to their respective platforms. If a network may be accessed by members of the public, there is a good chance that a bridge will link your resources to that network.
The benefits of cross-chain bridges have been discussed at length in other places; however, in this article, we will focus on some of the most significant ones for end users as well as developers.
Participate in the activities of other blockchains without having to be concerned about the price of the native tokens of those blockchains dramatically changing.
The user’s existing token holdings and access to the blockchain are irrelevant considerations throughout the onboarding process.
Tokens are more valuable if they can be utilized on other networks in addition to the one on which they were first issued.
WBTC is a wrapped token that provides some of these features. Bitcoin may have a big volume and market value, but its features are restricted. Due to Bitcoin’s proof-of-work method, which consumes large quantities of computing energy, the network’s confirmation time for transactions is far longer than that of other networks. In the same manner, the primary function of Bitcoin in Web3 is that of a value storage medium, and beyond that, its usefulness is severely restricted. However, if Bitcoin is wrapped so that it can be used on other networks (like Ethereum’s ERC20 network), users suddenly have the ability to use their Bitcoin to interact with applications and smart contracts built on other networks, giving them much more digital bang for their buck. This can be accomplished by wrapping Bitcoin so that it can be used on other networks (like Ethereum’s ERC20 network).