A Blockchain bridge, also known as a cross-chain bridge acts as a tunnel when you want to transfer funds between different blockchains.
Why Are Blockchain Bridges Needed?
Cryptocurrency cannot be directly transferred from one blockchain to another, as each blockchain is basically its own independent world. If you have Bitcoin but want to spend it on the Ethereum chain, there would be no easy way to do it except for exchanging your Bitcoin for some fiat currency, then using it to buy Ethereum.
This is where blockchain bridges come in. They act as tunnels between blockchains, allowing you to freely transfer and convert crypto across different blockchains.
How Do Blockchain Bridges Work?
Let's say you want to transfer some USDT on Binance BNB Chain to Ethereum. A bridge will first hold your Binance USDT, then release some previously held Ethereum USDT to your specified address. No crypto actually leaves its own blockchain.
So a bridge can basically be seen as a person who has money on multiple blockchains. You can give them crypto on one blockchain, and in return, they will give you crypto on another blockchain.
Risks when using Blockchain Bridges
One major downside when using blockchain bridges is centralization. Users will need to give up control of their funds and entrust the bridge will output currency on the other side.
Another factor is security. Blockchain bridges often contain large amounts of cryptocurrency, and are a lucrative target to hackers, just like banks are to robbers.