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Blockchain Bridge Meaning

A blockchain bridge is a protocol that enables the transfer of assets, data, or messages between two otherwise independent blockchain networks. Since most blockchains operate as isolated systems with their own rules, consensus mechanisms, and token standards, bridges play a critical role in enabling interoperability across the broader crypto ecosystem. At a high level, blockchain bridges work by locking assets on the source chain and minting or releasing corresponding representations on the destination chain.

For example, when Bitcoin is bridged to Ethereum, the BTC is typically locked in a smart contract or custody system, and an equivalent amount of wrapped BTC (wBTC) is issued on Ethereum. This allows users to interact with Ethereum-based DeFi applications while retaining economic exposure to Bitcoin. There are two main categories of blockchain bridges: trusted (centralized) and trustless (decentralized) bridges.

Trusted bridges rely on a central authority or a federation of validators to manage asset custody and verify transfers. While these bridges are often faster and simpler, they introduce counterparty risk and single points of failure.

Several high-profile bridge exploits have highlighted these vulnerabilities. Trustless bridges, by contrast, rely on smart contracts, cryptographic proofs, and consensus mechanisms to verify transactions across chains without centralized intermediaries.

These bridges improve transparency and decentralization but are often more complex to design and maintain. Blockchain bridges unlock significant functionality.

They allow users to move liquidity across ecosystems, reduce congestion on popular networks, and enable multi-chain decentralized applications. However, they also represent one of the most complex and risk-prone areas of blockchain infrastructure, making security, audits, and conservative design essential.

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Important Disclaimer:

Finery Markets BVI Limited (“Finery Markets”) provides software, technology infrastructure, and related Information and Communication Technology (ICT) services on a Software-as-a-Service (“SaaS”) basis. Finery Markets acts solely as a software vendor and does not operate a trading platform, does not intermediate, match, execute, clear, or settle transactions, and does not engage in any activities that would require regulatory authorisation under applicable laws.

Finery Markets’ software is non-custodial and is provided exclusively to licensed institutional entities that act as independent operators of their own environments. All counterparties are solely responsible for establishing and maintaining their own bilateral trading and settlement relationships. Finery Markets is not a party to any such arrangements and assumes no responsibility for the conduct, verification, or compliance obligations of any users of the software.

Nothing on this website shall be construed as a financial promotion, investment advice, or an offer to engage in regulated activities. Access to and use of the software is strictly limited to clients who have entered into a software licensing agreement with Finery Markets. Persons located in jurisdictions where such access is restricted should not rely on this website or any of its contents.

Additional notice to UK visitors: This website and associated communications are not intended to constitute a financial promotion under The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) and related guidance. Access to services provided by Finery Markets is limited to regulated entities, professional clients and eligible counterparties as set out by the Financial Conduct Authority. UK users are not permitted to use this website for the services of Finery Markets if they don't fall within these categories.