Blockchain101; article number three: cryptocurrency bridges.
An important topic to understand in cryptocurrency is cryptocurrency bridges. I think bridges are fun constructs because they bring us back to the basic concepts of cryptocurrency and the blockchain.
I like to call these basic concepts the building blocks of understanding because every time I have trouble understanding why something in cryptocurrency works the way it does… I just review these building blocks, and 99% of the time it helps me understand.
Blockchain bridges connect blockchains and allow us to transfer value from one blockchain to another.
We transfer this value, that of assets, to another blockchain to engage in strategies that earn income.
‘For example if @pouchin earns 500 Leo per week in Author rewards those Leo are an asset, that represents value for his posts.
That value or asset can be invested back into the Hive Blockchain or transferred to another blockchain like Binance smart chain, to invest that asset, to earn more value in the form of Cub.
‘But to invest that asset on another blockchain, @pouchon must send the asset, or more precisely, the value of the asset via a bridge from its current location the Hive blockchain, to anotherblockchsin.
The bridge could be the Leobridge or the Leofinance wrapping service, which is another name for a bridge.
Blockchain cryptocurrency tokens are blockchain specific.
In the case of Ethereum, only native Ethereum tokens can operate their, so only fungible tokens like Ether or Nonfungible tokens like ERC-20 tokens.
So our Hive tokens must have their value represented on the Ethereum blockchain by an ERC-20 Nonfungible token.
So when we send our tokens value to Ethereum we actually send the value of it to the other chain to be represented by a token native to this new blockchain.
‘For example WLEO is a nonfungible token on the Ethereum blockchain which represents the value of one Leo on the Ethereum blockchain.
We would send our Leo on Hive to the Hive-Ethereum bridge, and we receive the equivalent value in WLEO on the Ethereum blockchain.
‘Now we can invest our WLEO in financial projects to earn income.
Our first such community investment was the WLEO - Ethereum investment which brought good yields to the investors.
Blockchain bridges provide utility and attract people to your ecosystem.
Leofinance has built a bridge connecting the Hive Blockchain and the Ethereum blockchain, along with the Binance Smart Chain.
‘Soon that bridge will also connect to Polygon.
This means that investors wanting to transfer value to any of this blockchains can come here.
‘This increases the volume of eyeballs on our blockchain and our community.
This brings investors who may keep their Hive or Leo.
These investors pay transaction fees, which are then invested into Leofinance.
These investors can by Hive NFTs or invest in other projects, or themselves by vlogging or blogging, or curating.
@pouchin earns 500 Leo per week in Author rewards those Leo are an asset, that represents value for his posts.
@pouchon must send the asset, or more precisely, the value of the asset via a bridge from its current location the Hive blockchain, to anotherblockchsin.
@shortsegments ✍🏼