What Are Crypto Bridges and Are They Safe?Mar 31, 2023, 7:49PM
Bridges play a significant role in the world of cryptocurrency because they can encourage blockchain interoperability and boost DwFi liquidity.
There is a growing number of crypto transactions, and in today's time, most of these transactions depend on blockchain bridges.
These bridges enable the exchange of several tokens across the blockchain. However, one question arises: is this transaction safe? Let's get into more detail about the crypto bridges and whether they are safe.
What Are Crypto Bridges?
Crypto bridges, also known as blockchain bridges, enable interoperability between blockchains. They try to link the isolated ecosystem of the crypto so that the users can easily exchange data and transfer it across several blockchains. And each blockchain has its sets of technical and economic rules.
Blockchains are not interoperable, so it becomes challenging, especially in cryptocurrency. It basically means that the assets and data that are present on one blockchain cannot be transferred to another. To solve this issue, crypto bridges can transfer data and assets. But, every cross-chain bridging works to connect one specific pair of blockchains, which means one bridge cannot connect to all blockchains.
For example, if you create a bridge between SOL and ETH, you cannot use that particular bridge to transfer assets, let's say, from ETH to XRP. To move the assets or data, the users must also have crypto wallets, which must be compatible with that specific bridge.
Types Of Crypto Bridges
The two types of crypto bridges are:
Trusted bridges: They are also known as custodial bridges. It is so because in this type of bridge, a protocol's leaders directly hold onto each user's crypto. It means that when you lock the cryptocurrency, you want to exchange on the bridge, the company that owns it is responsible for seeing the whole transaction.
Trustless bridge: In trustless bridges, the users do not have to be concerned about the risk of the third party. In fact, these bridges do not rely on manually monitoring the crypto exchange; instead, they depend on autonomous contracts. Trustless bridges provide users with more control over their cryptocurrency. However, these trustless bridges are still new.
Are Crypto Bridges Safe?
Regarding the crypto bridges, it is crucial to understand that there are some security risks too. It is vital to know that since cross-chain bridges are relatively new concepts, they can be a primary target for hackers. However, it does not imply that every cross-chain bridge is unsafe. In fact, cross-chain bridging is one of the valuable parts of the web ecosystem. But, to be safe, every user must research the protocol they opt for.
First, one can find out how long that bridge has been present and if there is any history of hacks. To ensure safety, the bridge must also have a third-party audit that ensures code integrity.
As the technology progresses, the developer might review the security flaws, and there are chances that they will come up with ideas and code that ensure that the bridges are impenetrable. Until then, users have to be cautious while using the bridge.
Summing up, cross-chain bridges are crucial for managing cryptocurrencies and digital assets; however, they also come with some risks. The cross-chain bridges enable a significant upgrade to the capabilities of the blockchain. Combined with other features, the bridges can amplify the NFTs, blockchains, and cryptocurrencies capabilities at a great height.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.