What does bridging tokens mean?

Every cryptocurrency has a blockchain network, but this does not mean that only that specific cryptocurrency can exist in that blockchain network, since bridges exist for that purpose.

We have examples of these blockchains a:

  • Ethereum
  • Cardano
  • Tron
  • Binance Smart Chain
  • Solana
  • Polygon
  • Doge

So if I wanted to move my Ether on the Ethereum blockchain to the Binance Smart Chain blockchain, because for some reason I want to use it on a specific platform this would be achieved through these bridges.

What are their functions?

Mainly blockchain bridges are needed for 3 reasons:

  • Ease of use: with brokers as these do not work with native tokens if not with versions of these tokens over the Ethereum network.
  • Transaction fees: Sometimes it can be cheaper to make a transaction on a different network.
  • Innovation: Currently there are many blockchains and they all have different characteristics and we hope they will continue to exist more and more so this system helps that these new ecosystems do not have to start from scratch.

How many types are there?

We currently have two different types of bridges, centralized and decentralized, we will talk about these below:

  • Centralized blockchain bridges.

These are usually part of an exchange in which they function as a pool that stores coins in exchange for delivering tokens that represent these coins.

The main problem with this system is that we rely on the exchange for this, which highlights the popular saying in wallets, that as long as you don’t have your keys you don’t really own your coins.

  • Decentralized blockchain bridges

The second type of bridges are those based on Smart Contracts, which are created on both networks and these instead of freezing the assets burn them on the blockchain from which the coins originate.

There are currently many bridges available, such as Avalanche, Binance or Terra. In The Blue Manakin we put a lot of emphasis on analyzing all the options of bridges before putting our money in them, thus avoiding a scam or the freezing of our assets and that we can not get them out.

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