Two-Way Peg: How Blockchain Bridges Connect Different Networks
When you move Bitcoin from the Bitcoin network to Ethereum, you’re not really sending BTC—you’re using a two-way peg, a system that locks one asset on its native chain and releases an equivalent on another. Also known as cross-chain locking, it’s the quiet engine behind most token bridges that let you use BTC in DeFi without giving up Bitcoin’s security. This isn’t magic. It’s a trust mechanism: your original coins get locked in a smart contract or multisig wallet, and a matching amount of wrapped tokens is minted on the target chain. When you want to go back, you burn the wrapped tokens, and the original coins are unlocked. Simple. Secure. But only if the system isn’t hacked—or centralized.
The wrapped tokens, representations of assets on foreign blockchains like wBTC or wETH are the most visible part of this. They’re what you see in your wallet, but they only have value because someone else is holding the real asset. That’s why sidechains, independent blockchains connected to a main chain via two-way peg like Liquid Network or Polygon PoS matter. They’re not just bridges—they’re full ecosystems that run alongside Bitcoin or Ethereum, using the same peg rules to keep value locked in sync. Without a solid two-way peg, these sidechains would just be empty ledgers.
But here’s the catch: not all two-way pegs are equal. Some use trusted custodians (like BitGo for wBTC), others use decentralized validators (like RenVM), and a few rely on automated market makers. The more centralized the lock, the higher the risk. We’ve seen bridges get drained because a single key got compromised. That’s why projects like two-way peg systems that rely on cryptographic proofs instead of human oversight are gaining ground. They’re slower, more complex, but far harder to break.
What you’ll find below are real-world examples of how this works—sometimes well, sometimes dangerously. From crypto gaming tokens that use wrapped assets to exchanges that pretend to support cross-chain swaps, the posts here show you where two-way pegs are actually trusted, and where they’re just a marketing lie. No fluff. Just what you need to know before you move your coins across chains.
Nov
Sidechains connect to main blockchains via two-way pegs and bridges, enabling fast, low-cost transactions. Learn how they work, where they're secure, and why they're not safe for large transfers.
Read MoreSearch
Categories
- Cryptocurrency (47)
- Cryptocurrency Reviews (25)
- Blockchain Gaming (12)
- Technology & Security (9)
- Cryptocurrency News (6)
- Cryptocurrency Security (4)
