🟡Cross-chain bridges. What are cross-chain bridges? | Part 1/3
Money is an important part of life in the physical world. People use it to pay rent, buy food or travel. When it comes to international travel, they follow a familiar scenario to exchange their money for the currency used by the destination country. Web 3.0 features a similar mechanism called cross-chain bridging.
A cross-chain bridge, also known as a blockchain bridge, is a connection between two blockchains that can be used to perform actions like moving assets or data from one chain to another. Technically, this creates an interaction between two ecosystems. In addition, the bridge is also needed due to the growing number of decentralized apps (dApps) on various blockchains and “level 2” solutions. Their goal is to improve their own unique features associated with security and trust.
Importance of cross-chain bridges
Differences in protocols, managing structure, and other factors limit the ability of various ecosystems to interact. This is due to certain limitations of the blockchain ecosystems. This means that a particular network is unable to monitor and understand the activities of other networks. However, blockchain bridges create interoperability within Web3. The isolation of each blockchain economy requires mandatory use of a blockchain bridge.
How does it work?
Token transfer is one of the many ways a blockchain bridge operates. Smart contracts are used to lock up a certain amount of cryptocurrency that a user is willing to transfer from one blockchain to another. A tokenized version of another cryptocurrency, also known as a “wrapped token”, is usually unwrapped immediately after the first token type is locked.
