Blockchain bridges can be categorized according to their levels of centralization, their functions or the mechanisms under which they operate.

1. Custodial and non-custodial bridges. In other words, centralized and decentralized bridges. Custodial bridges require users to place their trust in a central entity that will be in charge of the proper and safe operation of the bridge. Users should always do extensive research before using them to make sure that this entity is trustworthy. In contrast, non-custodial bridges operate in a decentralized manner, relying on smart contracts to be in charge of the locking and minting processes of cryptocurrencies, removing the need to trust a centralized entity. In this case, the security of the system is only as good as long as the code is secure enough.
2. Categorizing blockchain bridges according to their function. Here we could divide them into wrapped asset bridges and sidechain bridges. Wrapped asset bridges enable interoperability of cryptocurrencies between different chains. An example would be moving $BTC to the blockchain Ethereum, where we get the ERC20 token wrapped BTC ($wBTC), which is compatible with the blockchain Ethereum. Conversely, sidechain bridges serve purely for linking the main chain with its sidechains. These bridges are necessary because the main chain and sidechains may have different consensus mechanisms, and asset transfer wouldn’t be possible without sidechain bridges.
3. Categorizing the division of blockchain bridges based on their mechanisms. Bridges may be categorized into one-way bridges and two-way bridges. A one-way bridge means that users can only move assets to one target blockchain, but not back to its native blockchain. Two-way bridges allow assets to be bridged in both directions.

Benefits of using blockchain bridges

• Connecting two separate blockchain networks, allowing efficient communication between them
• Blockchain bridges allow users to communicate with many blockchain networks, making them able to leverage the speed of several blockchains at once and thus improve scalability
• Blockchain bridges help keep markets stable by reducing monopolization by large corporations. The most popular cryptocurrencies, such as bitcoin and ethereum, make up the majority of the market share, resulting in a shrinking space for new projects. It is blockchain bridges that can help in these situations, as they create an ecosystem in which transactions are evenly distributed between multiple networks.

Blockchain bridges are a revolutionary technology, but beware of applications that currently still have weaknesses and can be exploited to the expense of users:

• Blockchain bridges differ in their design. Centralized bridges rely on a single administrator or a small group of entities to manage the minting and burning of tokens. In this case, a single party or group of trusted individuals would be responsible for the further functionality. Centralization creates risks for users and forces them to trust the company. However, trust is of little importance when you have a large amount of assets at your disposal.
• Technical shortcomings: to reduce the need to rely on “trusted” intermediaries, decentralized bridges use smart contracts to manage asset exchanges. Users store assets in a smart contract, which automatically initiates the minting of wrapped tokens on another blockchain. However, smart contracts have many shortcomings – the main one being that they are only as secure as their developers make them. Many blockchain bridges rely on the reliability of the smart contract code, not the security of the blockchain. If a hacker has discovered a flaw in the code that they can exploit, the application is vulnerable to an exploit, which puts users at great risk of having their digital assets stolen.

Conclusion

The world of blockchain technology is developing at a very fast pace. Mainstream blockchains are branching out into various alternative layer 1 and layer 2 chains. Since each blockchain has its own rules, it is complicated to enable communication between them. Blockchain bridges solve this very problem by providing better interoperability between blockchains, which is immediately followed by improvements in scalability and their overall efficiency as a bonus.
However, there is still the unanswered question of how to design blockchain bridges to be completely secure.

Personal Opinion

The great advantage of blockchain bridges is that they allow the user to share data and digital assets without being forced to use any intermediary in case they choose the decentralized way. Blockchain bridges facilitate interoperability, improve overall chain efficiency, reduce segmentation, and allow users to interact more freely across multiple blockchains. Blockchain bridges have tremendous potential in blockchain interoperability, which can solve many problems while removing several limitations of blockchain networks.

However, beware of the many scams that still occur today in the development of current applications for blockchain bridges. Before using any of them, do your research thoroughly and check who is behind the development of the project, what is the developers’ history and whether they have KYC. Study the whitepaper and check the code audit reports. Never underestimate the role of cybersecurity, because even one incident, e.g. a bug in the code and a subsequent hacking attack on the platform, can destroy the future of the entire project. You can lose money, which will greatly affect the motivation of users to continue investing their money and time in digital assets and Web 3.0. Always be prepared to accept a certain amount of risk and diversify your investments wisely. Your main job is to ensure that you are making consistent profits for the minimum amount of risk possible. Always DYOR!