Blockchain Bridges and Interoperability: An Overview

Blockchain Bridges and Interoperability: An OverviewHow blockchain bridges help enable interoperability between different networks.Bitcoin laid the foundation for blockchain nearly ten years back. Over a decade later, and more than 100 active public blockchain networks exist today.However, this growth has also resulted in a fundamental flaw when decentralized applications built on different blockchain could not interact with each other. The applications designed on one network work only within that system, resulting in the limitation of broader adoption. In its current state, the ecosystem restricts technological advancement by placing boundaries to innovation.As the number of networks is likely to increase further, the need for establishing a way to connect these networks will also rise. One of the attempts to unify the blockchain landscape is known as a “blockchain bridge.”A blockchain bridge is a system that helps transfer information between two or more blockchain networks. The information can include assets, contract calls, proofs, or arbitrary data. The bridge enables interoperability between different networks.In decentralized finance (DeFi) space, users can access the perks of multiple blockchain networks without compromising the benefits of the host chain with the help of blockchain bridges. This enables various use cases like cross-chain collateral, improved network scalability, and reduced transaction fees.Most blockchain bridges work on a mint-and-burn protocol. When a token is transferred from one network to another, the protocol burns the token and mints a similar token on the other network. However, there are multiple functions of the bridge aside from transferring tokens. Blockchain bridges are capable of exchanging any type of data, including smart contract cells, decentralized identifiers, and off-chain information such as stock market price.There are different types of blockchain bridges, and are broadly classified into federal or centralized bridges and trustless or decentralized bridges. Federal bridges depend on a central authority to function. They…