The value of cross bridges in the blockchain ecosystem
Blockchain technology had truly stood the test of time and evolved ever since its inception back in 2008 when the Bitcoin whitepaper was published for the very first time.
Satoshi Nakamoto truly showed us what digital money would look like and how it could function, a point in time since which many blockchain networks have risen, with a large variety in designs and functions associated with them.
The Mission for Decentralization
The key way in which blockchain technology has been appealing in the eyes of many is due to the fact that it offers decentralization.
Decentralization is the ability for a network not to be owned by any central authority but by several, potentially millions of stakeholders.
However, an issue arises due to this. You see, as the number of networks continues to grow, they remain cut off from one another.
This leads to a lack of interaction between blockchain networks, which limits decentralization and hinders potential advancements of the technology by placing boundaries. Applications designed for one network will only work for that specific network, limiting a broader adoption.
However, the world of blockchains is ever-evolving, and as such, there have been numerous projects that have attempted to resolve this issue by building what are known as bridges that go between these networks.
This move is intended to allow applications to build on each other’s services and impact a wide range of services. Specifically, applications such as decentralized finance (DeFi) will see benefits from the increased liquidity as well as the ability to build a network of services that can interact with each other.
Blockchain Bridges Explained
A blockchain bridge is this connection that can facilitate the transfer of tokens or any arbitrary data from one blockchain to another.
This means that both of these chains can have different protocols behind them, their own specific rules, and their own specific governance models; however, the bridge will provide a compatible way for them to interoperate securely.
These bridges have been created throughout a multitude of designs. However, they can be divided into two specific categories.
First, you have centralized bridges. These rely on trust or federation.
Centralized bridges will typically rely on a central authority or system to operate, which means that users are required to place their trust in a mediator or use a specific application or service to use them.
Second, you have trustless bridges — these attempt to be a lot more decentralized.
Here, users do not have to place trust in a single entity, and the trust instead is placed on a mathematical truth built into the code itself. In a decentralized system, this is achieved by many computer nodes, all of which reach a single agreement according to the specific rules which are pre-written into the software itself.
This, in turn, removes issues found in centralized systems.
Furthermore, bridges can be created for a variety of different use-cases. They are capable of transferring a token from one network to be used on another network. However, their functionality does not just stop here.
They can also be built to exchange any other type of arbitrary data. This includes specific smart contract calls, as well as decentralized identifiers. In some cases, you can even transfer off-chain information from oracles.
Sidechain Bridges Explained
There are bridges that link two different blockchains together. Then there are sidechain bridges, which can connect a parent blockchain to its child.
Due to the fact that the parent and the child, in this case, operate under different rules, the communication between them requires the usage of a bridge.
Let’s look at some examples to get this point across.
Axie Infinity developers created a dedicated Ethereum-based sidechain known as Ronin.
This sidechain allowed the game to scale beyond what was available on the Ethereum mainnet itself and allowed all players to deposit ETH, ERC-20 tokens, and NFTs into a smart contract, where Ronin’s validators would pick up and relay to the sidechain.
Then you have xDai, which is also an Ethereum-based sidechain and is secured by a set of validators.
Benefits of Blockchain Bridges
This interoperability between blockchains, especially between the main chain as well as the side chain, allows users to access the benefits of each without making any sacrifices when it comes to the host chain.
They can get access to cross-chain collateral, where they can transfer digital assets from a chain that holds high value but few dApps of its own to one that has a large DeFi ecosystem but needs additional liquidity.
Furthermore, you have scalability benefits, where bridges designed for high transaction volumes can enable greater scalability without forcing developers and users to give up the liquidity and network effect of the original chains.
Then you have efficiency, which allows users to make as well as receive transactions quickly without needing to pay high transaction fees. This, in turn, enables a better eCommerce experience.
The Netbox.Bridge is a tridirectional and reversible cross-chain bridge to/from the Ethereum Blockchain and to/from the Binance Smart Chain (BSC).
In other words, the Netbox.Bridge allows you to move your NBX funds from one chain to another, where, for example, you can swap your NBX coins on Netbox.Chain to NBXB tokens on Binance Smart Chain (BSC).
The Verdict — Accessibility Plays a Key Role
Blockchain bridges bring value to the blockchain ecosystem due to the fact that they enable users to access the benefits of the different blockchain technologies without remaining locked to a single platform.
This helps take pressure off a specific blockchain and allows users access to some of the most popular DeFi applications, and incentivizes innovation to other ecosystems.
Join us and stay tuned for more news very soon:
- Telegram: https://t.me/netboxglobal
- Discord: https://discord.gg/GCgZZPN
- Twitter: https://twitter.com/netboxglobal
- Linkedin: https://www.linkedin.com/company/netboxglobal
- Facebook: https://www.facebook.com/NetboxGlobal
- BitcoinTalk: https://bitcointalk.org/index.php?topic=5159126.0
- Medium: https://medium.com/@netboxglobal
- YouTube: https://tinyurl.com/netboxglobal
- Reddit: https://www.reddit.com/r/NetboxGlobal