Bridges

Bridges definition: Tools that enable interoperability between blockchains, allowing users to transfer data and assets across different networks.

A bridge in cryptocurrency is a protocol or technology that connects and facilitates interaction between multiple blockchain networks.

Blockchain bridges act as digital connectors that enable assets and data to move seamlessly between separate blockchain ecosystems, enhancing interoperability and leveraging each network’s unique capabilities.

Their primary function is to allow asset, data, or information transfers across different blockchains, boosting interoperability and expanding opportunities for decentralized applications (dApps) and decentralized finance (DeFi).

Bridges play key roles in crypto, including improving interoperability, facilitating asset transfers, and expanding DeFi use cases. By enabling different blockchains to communicate, bridges unlock cross-chain applications and services. They also make it possible for users to transfer digital assets between networks, such as using tokens on multiple chains to access features or services.

Bridges are critical for DeFi, where protocols often operate on different blockchains. They allow assets to move across ecosystems, providing access to a broader range of financial activities.

A major unidirectional bridge example is Wrapped Bitcoin (WBTC), which moves Bitcoin to the Ethereum blockchain, enabling interactions with Ethereum-based dApps. WBTC is a one-way bridge, meaning BTC moves to Ethereum as an ERC-20 token but cannot return. Bidirectional bridges, like Wormhole, facilitate transfers between multiple blockchains.

Bridges are crucial for expanding the crypto ecosystem, breaking down barriers between blockchains, fostering innovation, and boosting the utility and adoption of decentralized applications. In DeFi, bridges ensure asset mobility across diverse protocols, creating a more interconnected financial system.