Blockchain Bridges Explained: Functionality and Vulnerabilities

🌉 Blockchain bridges, introduced since 2008, act like physical bridges, connecting different blockchain networks or applications. They facilitate efficient asset transfers across various blockchains without loss of value. For instance, they enable transfers from Ethereum-backed assets to those backed by the US dollar, and between applications like Binance and Metamask.

🔗 Types include cross-chain, multichain, trusted (centralized), untrusted (decentralized), and side chain bridges. Each offers unique services and enhances network interoperability and flexibility. Trusted bridges involve a mediator for transactions, while untrusted ones rely on algorithms and smart contracts, offering greater autonomy in transactions.

📈 Advantages include facilitating tokenization, simplifying cross-border transactions, enabling decentralized exchanges (DEX), and improving supply chain management. They offer diverse investment and trading opportunities on a global scale.

🚧 Challenges include complexity, transactional fees, risks of centralized theft, and safety hazards. Centralized bridges, in particular, pose a theft risk if intermediaries misuse funds.

🔓 Blockchain bridges are susceptible to attacks due to their reliance on third-party data handling in centralized bridges and the absence of regulatory oversight in decentralized bridges. The two main attack types are code attacks, exploiting security loopholes in smart contracts, and design attacks, targeting bridge designs through social engineering.

🔍 In conclusion, while blockchain bridges offer numerous benefits, they are vulnerable to hacks, which can lead to significant losses. Users are advised to carefully choose and regularly update their knowledge about the bridge they use, considering its security history and user operability.

To dive deeper, check out the complete article:
https://droomdroom.com/blockchain-bridge-explained/

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