Bridges (Day 468)

Bridges are like "immigration departments" between different countries--it allows assets from one blockchain to be used in another one. Mostly, it's used for migrating assets away from Ethereum due to its expensive transaction costs.

If you have an ERC20 token on Ethereum, how can it be used on other blockchains, such as Binance Smart Chain or Solana?

The concept is very simple. You lock your Ethereum asset into a smart contract on Ethereum. With a validator that verifies the locked asset, it will launch a Binance Smart Chain or Solana equivalent asset. The bridge works both ways.

A bridge is also used for bringing assets over to layer 2 solutions, such as Polygon.

What if there are multiple bridges exist between two blockchains? Then users may end up with two different versions of an asset on the other blockchain, which could be confusing and cause problems when exchanging with other assets.

Instead of using decentralized bridges to bring assets across different blockchains, there are assets that create "official" native assets on multiple blockchains and allow users to convert between them. USDC is a good example. You can convert USDC on any blockchain and exchange it for another blockchain's native asset, or oftentimes referred to as coins or tokens. Some centralized exchanges handle the conversion between different blockchains for users, too, such as converting USDT from Omni Layer (on Bitcoin) to TRON USDT to ERC20 USDT.