Individual blockchain networks are self-contained and are unable to communicate directly with each other. In addition, they may use different consensus mechanisms, programming languages, etc., resulting in isolated ecosystems which operate independently from one another.
Improved interoperability between networks is an important factor in increasing innovation and growth potential in the industry, and the aim is that users and Dapps are able to operate across networks with ease. Bridges offer part of the solution to this issue by facilitating the transfer of data and tokens between networks.
Sending a token from one blockchain to another currently requires wrapping via smart contracts which lock the token to be sent (so it can no longer be used on the source blockchain) and mint a new wrapped token on the destination blockchain. This token maintains its value from the source blockchain, but can now be transferred, traded and invested as if it were any other token on the destination blockchain.
The wrapped token can also be returned, via the same bridging process, wherein it is burned and the original token is released back onto the original chain. This lock-mint, burn-release mechanism ensures that no tokens can be used on both chains at the same time.
The process described above is carried out in a range of ways by different projects who run blockchain bridges. Some operate trustless, decentralised bridges which have their own consensus mechanism that automatically handles the transactions between chains. Other bridging solutions are fully centralised and retain custody over the locked assets, transferring them back to the user once funds have been bridged back to the source blockchain.
The transfer of tokens between chains is useful in many ways, for example in using assets such as BTC in conjunction with Dapps on Ethereum, for building a Dapp that works across various networks, or simply sending tokens to a friend who uses a different network. Bridges also connect the Ethereum mainnet with sidechains (e.g. Polygon), where users can send transactions or interact with Dapps for much lower fees.