How Does a Cross-Chain Bridge Work?
Although cross-chain bridges can be used for other cool stuff like converting smart contracts and sending data, the most common utility is token transfer.
Before blockchain bridges, you’d have to rely on the services of centralized exchanges (CEXs) like Binance or Coinbase if you want to use a particular asset on another blockchain.
Let’s assume you have some BTC on the Bitcoin blockchain and want to move these tokens to the Ethereum blockchain, which has a native ETH token. To make this happen, you will need to send your BTC to a cross-chain bridge, which will hold your coin and create equivalents in ETH for you to use.
In reality, your BTC is not transferred from the Bitcoin to the Ethereum network. Instead, it is locked in a smart contract that gives you access to an equivalent amount in wrapped Bitcoin (wBTC) that can be used on the Ethereum blockchain. If you decide to convert the wBTC back to BTC, whatever is left of the wrapped token will be destroyed (burn) while you receive an equivalent amount of BTC.
