A bridge is a protocol that allows the seamless transfer of tokens or data between two different blockchains.
The Long Explanation
Solving the problem of ‘interoperability’ in blockchains is seen as the next most important hurdle to be crossed in the world of blockchain and cryptocurrencies.
With most blockchains (and all of the earliest chains) designed as standalone, one-stop shops, provisions were not made to allow direct cross-chain interactions. As a result, a decentralized application built on Ethereum, for instance, wouldn’t work on the Bitcoin blockchain.
It is this interoperability challenge that bridges set out to correct. A blockchain bridge allows you send/transfer tokens from one blockchain to another. To achieve this aim, it typically burns (locks up) the tokens sent from one blockchain, before minting fresh target tokens on the second blockchain.
This is achieved by creating a “wrapped” version of the target token, which is compatible with the target blockchain’s token standards.
Perhaps the most popular (and the most used) blockchain bridge is the Bitcoin-Ethereum bridge. Designed to unite the world’s two biggest chains, Wrapped Bitcoin (WBTC) tokens are ERC-20 compliant for use on the Ethereum network. Thus, the BTC you send is locked away, with equivalent WBTC tokens minted on the Ethereum chain.
Blockchain bridges rose in popularity at the backend of 2021. They’re appreciated for their ability to let users use tokens/cryptocurrencies outside of their native chains. This is certainly beneficial in a multitude of ways.
For starters, enable users to enjoy the best of two different markets (different blockchains) without having to switch from one to another. For instance, a lot of decentralized finance (DeFi) protocols have integrated bridges to allow their users swap tokens from different chains without exiting the platform.
Blockchain bridges may also allow you port digital assets to a faster, cheaper chain than their native network. This is certainly the case for Ethereum and its layer-2 blockchain bridges such as Arbitrum and Polygon.
Developers can, thus, exploit bridges to optimize application performance. Whereas some chains are cheaper than others, some settle transactions faster, and others may be better for smart contract creation and settlement. This interoperability means better overall performance for dApps.