Moshe Hogeg Explains Blockchain Bridges

You can use a bridge to transfer your ETH from Ethereum Mainnet to the alt L1. Let’s say you have ETH on Ethereum Mainnet but want cheaper transaction fees to explore different dapps. By bridging your ETH from the Mainnet to an Ethereum L2 rollup, you can enjoy lower transaction fees. Dapps to access the strengths of various blockchains – thus enhancing their capabilities . However, all blockchains develop in isolated environments and have different rules and consensus mechanisms. This means they cannot natively communicate, and tokens cannot move freely between blockchains.

Additionally, it makes it harder to develop applications that work across multiple blockchains. In contrast, Solana can handle more than 50,000 transactions per second, avoiding network congestion and keeping gas fees low. A trustless bridge, like Wormhole, can help developers and blockchain users get the best from Ethereum and Solana. Blockchains are like platforms on which developers can build products. As a result, an app built on Ethereum can’t naturally access Solana or Cardano blockchains. To get around this problem, a bridge can be built that connects Ethereum to Solana, for example.

How Trustless Ethereum Bridges Work

When a blockchain opens itself to outside data, it also exposes itself to new security risks. To date, it’s estimated that bridges have been responsible for around $2 billion worth of lost assets, stolen by hackers who have exploited the gaps in the bridge. Therefore, it’s important to consider the security risks of any https://xcritical.com/ blockchain bridge before using it. Through smart contracts, trustless bridges enable users to remain in control of their funds. Blockchain bridges work just like the bridges we know in the physical world. Just as a physical bridge connects two physical locations, a blockchain bridge connects two blockchain ecosystems.

This would require bridging the other way, from BTC to WBTC which can then be used as an asset on Ethereum. Web3 has evolved into an ecosystem of L1 blockchains and L2 scaling solutions, each designed with unique capabilities and trade-offs. As the number of blockchains protocols increases, so does the demand to move assets across chains To fulfill this demand, we need bridges. Bridges are crucial to onboarding users onto Ethereum L2s, and even for users who want to explore different ecosystems. However, given the risks involved in interacting with bridges, users must understand the trade-offs the bridges are making. Developers from different blockchain ecosystems to collaborate and build new platforms for the users.

When it comes to security, there are two primary types of blockchain bridges—trust-based bridges and trustless bridges. A trust-based bridge is a bridge that’s based on a centralized third party. This third party is responsible for holding the private keys of the assets that are being transferred.

Why Do We Need Bridges?

The Cosmos Hub enables these different blockchains to share data with each other, which makes it possible to develop applications that use data from multiple blockchains. Although bridging blockchains has allowed for a greater deal of innovation, it has also created new security risks that didn’t exist in previously air-tight digital systems. Therefore, software designers are now developing better systems that can link individual blockchains without exposing assets or user data to potential hackers reports Moshe Hogeg. Moshe Hogeg is a tech entrepreneur and chairman of blockchain research at the University of Tel Aviv in Israel.

For example, the Bitcoin-Ethereum Bridge enables the transfer of value from the Bitcoin blockchain to the Ethereum blockchain. Finally, the lack of interconnectivity has made it difficult to create a truly global and decentralized ecosystem. For example, if there’s no way to transfer value between the Bitcoin and Ethereum networks, then it’s difficult to create a decentralized application that uses both networks. Self check-in is similar to a trustless model as it removes the operator’s role and uses technology for its operations. Users always remain in control of their data and don’t have to trust a third party with their private information. Manual checkpoints are similar to a trusted model as it depends upon a third party, i.e., the officials, for its operations.

What Are Blockchain Bridges, And How Do They Work?

This means that the third party must be trusted for the bridge to work correctly. A blockchain bridge is a digital asset that allows two different blockchain networks to interact with each other. That being said, Moshe Hogeg says that blockchain bridges currently account for the majority of digital asset thefts. A smart contract is a program that runs on a blockchain and automatically executes transactions when certain conditions are met.

Ethereum, the largest blockchain, hosts most DeFi, NFT, metaverse, and Web3 apps. Developers like it because it offers powerful tools, but it also has some downsides. The costs of running operations there, called gas fees, can spike, and Ethereum also suffers congestion problems because it can support only about 15 transactions per second. However, unless your funds are already on an exchange, it would involve multiple steps, and you’d likely be better off using a bridge. Users to access new platforms and leverage the benefits of different chains.

• Dapps to access the strengths of various blockchains – thus enhancing their capabilities .
• First, each blockchain operates using a distinct set of rules and protocols, which make it difficult to transfer data or value from one system to another.
• By creating a bridge between two blockchain networks, users can transfer data across the two systems, allowing them to conduct transactions across assets.
• Therefore, it’s important to consider the security risks of any blockchain bridge before using it.
• Bridges are crucial to onboarding users onto Ethereum L2s, and even for users who want to explore different ecosystems.
• Therefore, the work of a bridge is to enable blockchain interoperability.

To strengthen the bridge security, we are offering community members to participate and earn incentives.

Moshe Hogeg Explains Blockchain Bridges

As developers embrace building products that can be accessed across multiple blockchains, more Ethereum bridges have launched. NEAR offers a trustless connection between the NEAR blockchain and Ethereum, powering DeFi, NFT, and other dapps. Harmony One is a trustless bridge linking Ethereum to other blockchains, and the Polygon bridge connects Ethereum to the Polygon blockchain. However, blockchain bridges can also be used to transfer data between blockchains. For example, the Cosmos Hub is a blockchain that’s designed to interact with a number of different blockchains.

Bridges facilitate communication between blockchains through the transfer of information and assets. The blockchain technology that underpins cryptocurrencies has enormous potential. The problem is that there are multiple blockchains out there, resulting in a deeply fragmented environment. Fortunately, trustless What is a Blockchain Bridge Ethereum bridges are helping to overcome this challenge. A trustless bridge is a bridge that doesn’t require a third party to hold private keys. First, each blockchain operates using a distinct set of rules and protocols, which make it difficult to transfer data or value from one system to another.

Therefore, the work of a bridge is to enable blockchain interoperability. Blockchain bridges are important because they enable developers to tap into the strengths of various platforms to build more useful products. And these bridges will play a critical role in achieving the aspirations of Web3. The hacking of Wormhole, a Solana-Ethereum bridge, drew attention to blockchain bridges. Its hacking resulted in the loss of more than $320 million in investors’ funds. A two-way peg enables the transfer of value from one blockchain to another.

Moshe Hogeg has donated millions for crypto mining research and founded the Alignment Blockchain Hub. Additionally, he led three coin offerings for his companies raising over $250 million. In the following article, Mr. Hogeg explains blockchain bridges, problems, and security risks as well as improvements for the digital currency to become a global standard. The blockchain bridge was originally designed as a solution to problems with cross-blockchain operability. In theory, they have helped to promote innovation, but they have also created new security risks, amounting to around $2 billion in stolen assets. Nevertheless, they are an integral part of modern blockchains and will continue to improve as digital payments become a global standard.

Blockchain Bridges

As a user, you trust the officials to make the right decisions and use your private information correctly. Bitcoin is both the name of the flagship cryptocurrency created by mysterious Satoshi Nakamoto and the blockchain that hosts it. Ethereum, another major blockchain, hosts most of the decentralized apps or dapps. Blockchains are designed to be isolated and independent from one another. This is done for security reasons, as it reduces the surface area for attack and makes it more difficult for hackers to target specific blockchains.

However, Moshe Hogeg says that this isolation also creates a number of problems. They have trust assumptions with respect to the custody of funds and the security of the bridge. For Ethereum to scale and keep up with demand, it has required rollups.

Alternatively, L1s like Solana and Avalanche are designed differently to enable higher throughput but at the cost of decentralization. But, what do you do if you want to make a similar exchange to use a different blockchain? Like the currency exchange we made for euros, we need a mechanism to move our ETH from Ethereum to Arbitrum. They are trustless, i.e., the security of the bridge is the same as that of the underlying blockchain. If you have ETH on Ethereum Mainnet and you want to explore an alt L1 to try out their native dapps.

Bridge Use Cases

For example, the Ethereum-based decentralized exchange—Uniswap—uses smart contracts to enable the trustless exchange of digital assets. Moshe Hogeg explains that a blockchain bridge is a digital asset that links two different blockchain networks so they can interact with each other. By creating a bridge between two blockchain networks, users can transfer data across the two systems, allowing them to conduct transactions across assets. This is similar to how a bank may conduct transactions using both USD and Euros.

Explore Blockchain Ecosystems

The most common type of trust-based bridge is a centralized exchange. Let’s say you want to own native Bitcoin , but you only have funds on Ethereum Mainnet. However, WBTC is an ERC-20 token native to the Ethereum network, which means it’s an Ethereum version of Bitcoin and not the original asset on the Bitcoin blockchain. To own native BTC, you would have to bridge your assets from Ethereum to Bitcoin using a bridge. Alternatively, you might own BTC and want to use it in Ethereum DeFi protocols.

Trustless Bridges

Many bridging solutions adopt models between these two extremes with varying degrees of trustlessness. Bridges exist to connect blockchains, allowing the transfer of information and tokens between them. To exchange your USD for euros you can use a currency exchange for a small fee. Manual Checkpoints — operated by officials who manually check all the details of your ticket and identity before handing over the boarding pass.