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3. Advanced Course

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  1. 1. What is Taproot?
  2. 2. Blockchain bridges – what are they?
  3. 3. What is Ethereum Plasma?
  4. 4. What is Ethereum Casper?
  5. 5. What is Zk-SNARK and Zk-STARK? 
  6. 6. What is Selfish Mining? 
  7. 7. What is spoofing in the cryptocurrency market? 
  8. 8. Schnorr signatures - what are they? 
  9. 9. MimbleWimble - what is it? 
  10. 10. What is digital property rights in NFT?
  11. 11. What are ETFs and what role do they play in the cryptocurrency market? 
  12. 12. How to verify a cryptocurrency project – cryptocurrency tokenomics 
  13. 13. What is the 51% attack on blockchain?
  14. 14. What is DAO, and how does it work?
  15. 15. Zero-knowledge proof – a protocol that respects privacy 
  16. 16. What is EOSREX?
  17. 17. What is Proof of Elapsed Time (PoET)?
  18. 18. Mirror Protocol – what it is? 
  19. 19. What are synthetic assets? 
  20. 20. How to create your own NFT? 
  21. 21. Definition of DeFi, and what are its liquidations?
  22. 22. New identity system - Polygon ID
  23. 23. Ethereum Foundation and the Scroll protocol - what is it?
  24. 24. What is Byzantine fault tolerance in blockchain technology?
  25. 25. Scalability of blockchain technology - what is it?
  26. 26. Interchain Security - new Cosmos (ATOM) protocol
  27. 27. Coin Mixing vs. Coin Join - definition, opportunities, and threats
  28. 28. What is Ethereum Virtual Machine (EVM) and how does it work?
  29. 29. Soulbound Tokens - what are they, and how do they work?
  30. 30. Definition of LIDO - what is it?
  31. 31. What are Threshold Signatures, and how do they work?
  32. 32. Blockchain technology and cyberattacks.
  33. 33. Bitcoin script - what it is, and what you should know about it.
  34. 34. What is zkEVM, and what are its basic features?
  35. 35. Do confidential transactions on blockchain exist? What is a Confidential Transaction?
  36. 36. Algorithmic stablecoins - everything you should know about them.
  37. 37. Polygon Zk Rollups ZKP - what should you know about it?
  38. 38. What is Web3 Infura?
  39. 39. Mantle - Ethereum L2 scalability - how does it work?
  40. 40. What is the NEAR Rainbow Bridge?
  41. 41. Liquid Staking Ethereum and LSD tokens. What do you need to know about it?
  42. 42. Top 10 blockchain oracles. How do they work? How do they differ?
  43. 43. What are Web3.js and Ether.js? What are the main differences between them?
  44. 44. What is StarkWare, and recursive validity proofs
  45. 45. Quant Network: scalability of the future
  46. 46. Polygon zkEVM - everything you need to know
  47. 47. What is Optimism (OP), and how do its roll-ups work?
  48. 48. What are RPC nodes, and how do they work?
  49. 49. SEI Network: everything you need to know about the Tier 1 solution for DeFi
  50. 50. Types of Proof-of-Stake Consensus Mechanisms: DPoS, LPoS and BPoS
  51. 51. Bedrock: the epileptic curve that ensures security!
  52. 52. What is Tendermint, and how does it work?
  53. 53. Pantos: how to solve the problem of token transfer between blockchains?
  54. 54. What is asymmetric encryption?
  55. 55. Base-58 Function in Cryptocurrencies
  56. 56. What Is the Nostr Protocol and How Does It Work?
  57. 57. What Is the XDAI Bridge and How Does It Work?
  58. 58. Solidity vs. Rust: What Are the Differences Between These Programming Languages?
  59. 59. What Is a Real-Time Operating System (RTOS)?
  60. 60. What Is the Ethereum Rinkeby Testnet and How Does It Work?
  61. 61. What Is Probabilistic Encryption?
  62. 62. What is a Pinata in Web 3? We explain!
  63. 63. What Is EIP-4337? Will Ethereum Account Abstraction Change Web3 Forever?
  64. 64. What are smart contract audits? Which companies are involved?
  65. 65. How does the AirGapped wallet work?
  66. 66. What is proto-danksharding (EIP-4844) on Ethereum?
  67. 67. What is decentralised storage and how does it work?
  68. 68. How to Recover Cryptocurrencies Sent to the Wrong Address or Network: A Practical Guide
  69. 69. MPC Wallet and Multilateral Computing: Innovative Technology for Privacy and Security
  70. 70. Threshold signature in cryptography: an advanced signing technique!
  71. 71. Vanity address in cryptocurrencies: what is it and what are its characteristics?
  72. 72. Reentrancy Attack on smart contracts: a threat to blockchain security!
  73. 73. Slither: a static analyser for smart contracts!
  74. 74. Sandwich Attack at DeFi: explanation and risks!
  75. 75. Blockchain RPC for Web3: A key technology in the world of decentralized finance!
  76. 76. Re-staking: the benefits of re-posting in staking!
  77. 77. Base: Evolving cryptocurrency transactions with a tier-2 solution from Coinbase
  78. 78. IPFS: A new era of decentralized data storage
Lesson 2 of 78
In Progress

2. Blockchain bridges – what are they?

Bridges can be defined as a system that transfers information between two or more blockchains, e.g., if you have BTC and you want to release it as Ethereum, you can do just that using such a bridge. It used to be that one of the biggest problems when it came to blockchains was the inability to work together. He works wonderfully as a single entity. However, it is unfortunately limited by its walls. Many times such transactions (BTC → ETH) led to high costs and congestion. Fortunately, bridges solve this problem. They allow the transfer of tokens, digital assets or smart contracts between two independent platforms. Importantly – a bridge is a neutral zone that allows users to switch seamlessly between one platform and another. This makes using cryptocurrencies much easier. 

For bridges to work as they should, they must consist of:

●   An actor / oracle / validator or relay. It monitors the state of the source string.

●   A communicator that passes information from the source chain to the destination chain.

●   Consensus. Some bridge models require consensus among source chain monitors to pass this information to the target chain.

●   Cryptographic signature – information sent to the destination chain must be cryptographically signed.

If we take a closer look, the very concept of bridges is similar to that of layer two, although the two systems have distinctly different goals. As a reminder – layer two is built on top of an existing blockchain – improving speed. Interchain bridges are also independent entities, except that they do not belong to any chain of the network.

How do blockchain bridges work?

Bridges do many cool things: transform smart contracts or transfer data. However, they gained their popularity through token transfer. A good example, which we mentioned earlier, is the transfer on the line BTC → Ethereum. As you know, these are the two biggest cryptocurrency networks. Both have different rules and protocols. With bridges, we can transfer our BTC to Ethereum and do things with it that we couldn’t on the Bitcoin blockchain. Sounds great, right? 😀 From the inside, it works like this: you have BTC and you want to move some of it to Ethereum. Then the blockchain bridge will hold the BTC coin and create a counterpart to it in ETH. And it is this counterpart coin that you use in the way you want. The “actual” bitcoin coin doesn’t go anywhere. Instead, the amount of BTC you would like to move gets blocked in the smart contract, and you get access to the same amount in ETH. The whole idea is that the blockchain bridge catches your BTC, wraps it in an ERC-20 contract and gives it the functionality of an Ethereum token. The wBTC token, for example, which is a wrapped token, is the result of this very process.

Now let’s look at the difference if we wanted to swap BTC for ETH on a regular trading platform. You would have to deposit them in your wallet first, then transfer them to the exchange and swap them. By then we would have paid more in transaction fees than the amount of BTC you wanted to move. The whole transaction using bridges is quick and seamless.

Bridges – types.

In the blockchain world, there are four main types of bridge. Of course, each of them has its advantages and disadvantages. We will now take a look at each of them.

  1. Generalized, where protocols are specifically designed to transfer information across multiple blockchains. Due to the single integration and complexity, this type has access to the entire ecosystem within the bridge. One example of such a bridge is the IBC, which sends messages between two heterogeneous chains while having a guarantee of finality.
  2. Asset-Specific: this type of bridge provides access to a well-defined resource from a foreign network. These types of bridges are the easiest to implement and are very fluid. However, they have limited functionality and can be implemented in any destination chain.
  3. Chain-specified: is a bridge between two blockchains. Typically, its purpose is to handle simple operations, mainly related to locking or unlocking tokens on the source/target chain. They have limited complexity and therefore enjoy significantly faster time-to-market. However, due to the wider ecosystem, they are not as scalable.
  4. Application-specific: these bridges take the form of an application that provides access to at least two blockchains within its services. The application uses a smaller code base. To make the application work properly, modular adapters are installed on the blockchain. A blockchain with such an adapter gets access to all others to which it is already connected. Well, the definite downside of application-specific bridges is that it cannot be connected to others.

Trust-based and untrusted blockchain bridges

The downside of bridges is definitely centralization. As you have already noticed, during the ”transformation” of coins you temporarily lose control over them and entrust them into the hands of someone else. Let’s now check how bridges work with and without trust.

●   Trust-based bridges – they are fast and cost-effective. Especially if you want to transfer a large amount of crypto. But in this case, the pool of services that are trusted is relatively small. By entering the territory of lesser-known brands, you are putting yourself at risk. Be careful – we always say that you should do thorough research before any investment. This is why they are unattractive, especially for smaller traders.

●   Trustless bridges – are a decentralized option. Their purpose is to provide a high degree of security when transferring coins. Theoretically, they work just like a real blockchain. Using this solution, we do not have to fear that during the transaction our coins will end up in the wrong hands, but not all gold that glitters. The problem with these bridges is that in most cases the services are provided by independent contractors.

Examples of bridges

  1. Binance Bridge. It has the largest selection of cryptocurrencies you can trade. It supports all known blockchains, i.e., Ethereum, Solana, TRON etc.
  2. cBridge. You can access it directly from Binance if you would rather not use the main bridge. It offers many cryptocurrencies that you can interact with. Its downside, however, is that you have to link your wallet to it before performing operations.
  3. AnySwap. It offers many more features than just cryptocurrency transfer. Here, you also need to connect your wallet, but it allows you to see all your crypto balances and freely transfer them from one place to another.
  4. Corss-Chain Bridge. It supports cryptocurrencies, tokens and NFT across multiple networks. The platform is relatively young, as it was founded in March 2022. It runs on blockchain networks such as Avalanche, BNB Chain, Polygon, Ethereum, and Phantom.
  5. Umbria Narni Bridge. It allows us to transfer blockchain assets, using a liquidity pool where assets are stored in multiple chains. You can find blockchain networks like Polygon Mainnet, Ethereum Mainnet, BNB Chain, Avalanche, Solana, Cardano.
  6. Multichain. More commonly known to some crypto-explorers as Phantom Anyswap. Multichain is a cross-chain router protocol. It allows data and assets to flow between different blockchain networks. It supports many tokens.
  7. Wormhole. Compared to other bridges, it works a little differently. It locks the source cryptocurrency with a smart contract and ‘wraps’ the coin in a token minted by Wormhole on the target blockchain.

Summary

Blockchain bridges are a big facilitator in the cryptocurrency world. With them, we are moving closer to an innovative and standardized cryptocurrency economy. What is interesting and cool about the crypto world is that we are not limited to what we already have. New and innovative solutions are constantly being created to improve the already existing crypto world.

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