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Bridges are more significant than a typical stretch of road for a reason, and the holes in them are more hazardous. As the world of Blockchain technology has become more advanced, an increasing number of Crypto transactions now rely on so-called Blockchain bridges, which allow for the exchange of a variety of tokens.
In this article, let’s learn more about Blockchain bridges and understand why they are prone to attacks.
What are Blockchain bridges? What issue does it solve?
Blockchain bridges, sometimes referred to as network bridges or cross-chain bridges, are tools created to address the issue of interoperability between Blockchains. Bridges are now an essential part of the Blockchain industry because, as things stand, Blockchains cannot communicate with one another and operate in silos.
For instance, users cannot use ether (ETH) on the Bitcoin Blockchain or bitcoin (BTC) on the Ethereum Blockchain. So, if a user (suppose Barney) wants to buy something from another user (suppose Robin) but holds all his funds in BTC, and Robin only accepts ETH, Barney will run into a problem. He won’t be able to send BTC directly to Robin. However, Barney can take further steps to purchase ETH or exchange some of his BTC for ETH. In contrast to fiat currencies and credit cards, which can be used with a variety of providers, this might be considered a significant drawback.
Blockchain bridges are designed to solve this problem.
Despite the fact that each Blockchain bridge is unique in its design, most of them let users lock in a particular amount of digital assets on a single Blockchain. In exchange, the protocol will then credit or mint an equal amount of assets on another Blockchain, equal to the locked-in funds, as payment.
These new assets are referred to as “wrapped” versions of a token. For instance, a user who locks in their ether (ETH) on one Blockchain will get a “wrapped” ether (wETH) on another Blockchain. As a result, Barney can send wrapped bitcoin (wBTC), which operates on the Ethereum Blockchain, to Robin more easily through a bridge.
Are Blockchain bridges safe?
Nobody denies that there are several unmet security issues with Blockchain bridges. Blockchain bridges are a novel technology, and hackers are aware of this, according to Crypto traders.
This does not imply that all Blockchain bridges are “unsafe,” but they are among the vulnerable parts of the Web3 ecosystem. Therefore, people who are intrigued by Blockchain bridges must thoroughly investigate the protocol they intend to use.
Before choosing to use a Blockchain bridge, find out how long a bridge has been in existence and whether it has a history of hacks. Your selected bridge should ideally have a third-party audit confirming the code’s security. Reviewing open information about your bridge’s leadership and security protocols is also a good idea.
Reasons behind the vulnerability of the Blockchain bridges
First off, bridges only broaden the attack surface that would-be hackers have access to, making the Crypto ecosystem more complex and increasing the potential for attacks.
Second, many are developed in a fundamentally unique way from the Blockchain they bridge due to the lack of a larger development community. As a result, the code is not as carefully and thoroughly examined for potential bugs.
Why are Blockchain bridge attacks so common?
Blockchain bridges are some of the most profitable and vulnerable DeFi protocols. These bridges are the main hubs for Crypto transfers, even if they provide “decentralized” finance. There is always a lot of Crypto in these protocols since users should lock their original tokens on a bridge in order to mint wrapped tokens on another chain. Hackers can steal millions, if not billions if they manage to breach a bridge.
Bridges are not just a lucrative target but also frequently have numerous weak points. Blockchain bridges haven’t been battle-tested like Bitcoin (BTC). The programming needed to connect two Blockchains hasn’t yet been perfected by bridge developers. As a result, there’s a potential that hackers with Blockchain coding knowledge could identify weaknesses in a bridge’s smart contracts.
Moreover, some bridge projects also publish their source codes as open source to encourage transparency. Open-source codes promote confidence while making it simpler for malicious actors to examine, duplicate, or alter a bridge’s software.
Last but not least, bridge hackers have an easier time avoiding legal ramifications because DeFi is generally unregulated and doesn’t demand KYC (know-your-customer) documents. No established regulatory structure exists to deal with Blockchain bridge hacking, even if authorities catch the hacker.
Bridges have the potential to boost DeFi liquidity and encourage Blockchain interoperability. Building secure Blockchain bridges is still difficult in the Crypto sector. Blockchain bridge attacks are too frequent, and many Web3 users are reluctant to use bridges after learning about million-dollar exploits.
Bridges are a useful DeFi tool, but users should take precautions when handing their Crypto to these protocols.Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.