Today we will talk about blockchain bridges, since not all users know what they are and what they are for.
The problem with blockchains is that most of them are not compatible. If a developer wants to launch a decentralized application, then he chooses a specific blockchain and works only within its ecosystem - it will not be possible to cover everything at once. For example, there are many well-known decentralized exchanges on the Ethereum blockchain, but only tokens of the same name are allowed to trade there. And what if you need to transfer tokens from one network to another in order to use its services? This is what blockchain bridges are used for.
How it works?
A bridge is a link between two different blockchains, whose task is to move tokens from one system to another. The movement takes place according to the mint-and-burn principle. When a token leaves one blockchain network, it is blocked or “burned out”, and its equivalent is created in another network. For example, one AKRA token on the Ethereum network will always be equal to one token on the Binance network. This applies to both its cost and the preservation of the terms of smart contracts.
The work of the bridge on the example of the Binance
Binance Bridge is a cross-chain service that aims to provide interoperability between different blockchains. This
bridge makes it possible to transfer cryptocurrencies to the Binance Chain ecosystem according to a simplified
scheme - the conversion looks no more complicated than a regular transaction.
The user can select any tokens created on the Ethereum or TRON blockchain networks, and then in a couple of clicks
convert them to wrapped tokens on the Binance Smart Chain and vice versa. The bridge works in both directions. The
cost of wrapped tokens is equal to the cost of the original cryptocurrency, which eliminates the need for
adjustments and self-calculation of the exchange rate.
What are the advantages of the Binance Smart Chain Bridge over the direct exchange of tokens on the exchange or in
third-party cryptocurrency exchangers? Here they are:
- the bridge interface does not require mandatory registration with Binance for cross-chain cryptocurrency exchange;
- no commission for the exchange is charged - the amount of gas necessary for the transaction is only debited from the user's account;
- the conversion of cryptocurrencies takes only a few minutes, the speed depends on the network load and activity on the blockchain, but is traditionally higher than when exchanging on the exchange.
A bridge is a tool for the free circulation of cryptocurrencies between various blockchain networks. Binance Bridge allows you to freely exchange not only the main cryptocurrencies, but also all the tokens included in the ecosystem that comply with one of the standards: ERC-20, BEP-20 or TRC-20.
