What’s The Problem With Cross-Chain Bridges? Is There A Solution?
All About Blockchain Bridges
What Are Blockchain Bridges?
As a refresher, blockchain bridges are a technology platform, channel, route, or medium that connects two blockchain ecosystems with the purpose of allowing the two sides to communicate information as well as transfer digital items such as data, cryptocurrencies, and other blockchain-based token assets.
Exploring The Concept
Cryptocurrencies, blockchains, and Web3 can be broken down into specific segments and industries such as DeFi, smart contract platforms, currencies, stablecoins, interoperability, infrastructure, layer-2s, and bridges.
Bridges, in particular, are often underreported and talked about with hesitancy as they’re a complicated concept riddled with controversy. However, blockchain bridges are a necessity in moving the Web3 industry forward.
This is because the demand and use cases for blockchain bridges have increased as the number of blockchain protocols has increased and with that the amount of data, assets, and tokens being exchanged on certain blockchains across ecosystems.
However, in this process, as with all growing industries and technologies, there’s been setbacks regarding the technology, safety, risk, and reliability of bridges in being able to accept the burden of being the ‘transferer’ of cross-chain assets.
Why Are Blockchain Bridges Needed?
Blockchains need to communicate because developing in a silo is similar to driving down a dead-end road.
As the industry grows, as more transactions hop onto the blockchain, as more DApps go live on the blockchain, and as there’s increasing activity happening and more use cases developing, blockchain bridges are needed to bring these functionalities and features to other chains. This is why blockchain bridges are needed i.e., to expand the realm of cross-blockchain functionality.
Specifically, blockchain bridges are needed to facilitate the cross-chain transfer of assets and information, they’re needed to help DApps access the strengths of various blockchains (scalability and speed), they’re needed to help users access new platforms and experiences, and they’re needed to facilitate cross-chain developer collaboration.
If these four facets of blockchain bridges can be achieved, then this will allow the cryptocurrency, blockchain, and Web3 industries to grow to the next level.
What Are The Problems/Risks With Cross-Chain Bridging?
It’s not easy to spin up a blockchain, and it’s even more difficult to create mechanisms that make blockchains able to communicate with each other. So far, the perfect bridge has not been created — and currently, there are multiple problems/risks with blockchain bridges.
- First, is smart contract risk, which occurs when there are bugs in the smart contract code that causes users to lose their funds and for the bridging service to malfunction.
An example of this type of cross-chain bridge problem occurred with the Nomad Bridge hack which was essentially a result of a vulnerability in the smart contract’s code that allowed the hackers to withdraw users’ wBTC and ETH.
Another example is the Wormhole Bridge hack which occurred when a hacker managed to siphon $320 million in wETH because of exploited unpatched Rust contracts in Solana.
- Second, is technology risk — as said before, the technology hasn’t reached near peak development. As a result, there’s been recorded software failures, buggy code, human errors occurring, spam, and malicious attacks.
- Third, is censorship risk — this problem with cross-chain bridging typically occurs with bridges that are overly centralized or that rely on a powerful intermediary that gets to decide how the service is run or operationalized.
- Fourth, is custodial risk, which happens when bridge operators collude to steal funds from the bridge.
- Fifth, is money-laundering and criminal risk, which happens when pseudonymous individuals or organizations use cross-chain bridges to facilitate crimes, hacks, and money laundering for nefarious activity.
RenBridge is an example of this type of cross-chain bridging issue where nefarious actors take advantage of the decentralized nature of bridges and use them to anonymously launder funds that were either stolen, hacked, or gained through ransom.
In summary, the above examples and illustrations show the apparent issues and weaknesses of traditional blockchain bridges.
How Does The Internet Computer Implement Cross-Chain Bridging?
The Internet Computer is currently undergoing several efforts to integrate itself with other blockchains, for example, the Ethereum blockchain and the Bitcoin blockchain. One of these, in particular, is more similar to a traditional bridge, and that’s the one with the Ethereum blockchain.
Internet Computer — Ethereum
Last winter, Terabethia, a cross-chain contract communication and asset mirroring protocol, launched a Testnet bridge between Ethereum and the Internet Computer that allows Internet Computer users to mirror and use Ethereum tokens (fungible and non-fungible) on the Internet Computer blockchain (and vice versa).
With this development, Terabethia essentially turns the Internet Computer into a layer-two scaling solution for Ethereum.
This protocol follows the path that many Internet Computer followers believe the Internet Computer can be a compatible network with the Ethereum blockchain to truly bring to life a Web3 internet.
In summary, Terabethia is working on solutions to bridge any ERC-20 tokens over to the Internet Computer, they’re creating solutions to increase DeFi activity on Sonic for example, and implementing future possibilities to bridge NFTs to the Internet Computer using a new DIP-721 standard.
Internet Computer — Bitcoin
The second and final aspect with regards to bridging on the Internet Computer is an upcoming integration with the Bitcoin network. As previously written, the Internet Computer is working on a direct integration method to link the blockchains together so that the Internet Computer can have access to the world’s largest blockchain.
In particular, the upcoming Bitcoin integration will allow smart contracts on the Internet Computer to receive, hold, and transfer Bitcoin on the Bitcoin network, thus bypassing risky bridging and wrapping protocols.
What this means is the Internet Computer is not working on a traditional bridge to connect the networks, but rather is working to directly integrate the two networks in a peer-to-peer manner. Direct integration with Bitcoin ensures a more secure multi-chain future that will expand to other networks such as Ethereum.
What’s The Future Of Bridging On The Internet Computer?
Bridges are a temporary way that will allow the Internet Computer to interact with other blockchains. This is because full-on direct integrations take a lot of work, effort, and time from the developers. First on the agenda is Bitcoin, and following that the Internet Computer will begin its integration with Ethereum. Nonetheless, bridges and direct integrations are the future, especially if transactions and development on the blockchain continue growing.