Blockchain Vocabulary - Bridges (27/30)

Bridges connect two blockchain platforms by allowing the transfer of assets and data between them.

Blockchain platforms are built with different languages, protocols, and structures so they do not easily interact with each other.

You may want to use your Bitcoin as collateral in Ethereum finance applications. Without needing to sell the Bitcoin for Ether, you could lock your Bitcoin in a bridge and receive a Wrapped Bitcoin on the Ethereum blockchain in return.

Bridges can be maintained by centralized entities, which creates counterparty risk. Or they can be maintained using smart contracts and algorithms, which creates technology risk.

Despite the security and structural vulnerabilities bridges may introduce, they are an important and necessary component to expanding the use cases of blockchain technology.

Further reading: https://ethereum.org/en/bridges/