6. Bridge and Gateway¶
If you want to deposit or withdraw funds, either in fiat or from other blickchains, You may use a bridge or gateway service to do so. In the next section describes about Bridge and Gateway services.
6.1. Bridge and gateway services¶
Both bridges and gateways allow you to deposit and withdraw coins, but there is a difference in the amount of trust you need to place in the service providers.
6.2. Bridges: trust-free model¶
A bridge service provides a way to deposit an amount of a crypto-currency other than LocalCoin, and in turn receive a SmartCoin equivalent. SmartCoins have no counterparty risk, so the only risk you experience when using a bridge is during the short time it takes to complete the transfer. This is better than a centralized exchange such as Poloniex, where you are always at risk of the exchange being hacked, going bankrupt, or experiencing any number of other issues.
6.3. Gateways: trust-based model¶
Gateways are basically equivalent to the standard exchange model where you depend on the solvency of the exchange to be able to redeem your coins. Generally gateways issue assets prefixed with their symbol, like OPEN, TRADE, or META. These assets are backed 100% by the real BTC or ETH or any other coin that people deposit with the gateways.
An OPEN.BTC is thus in theory equivalent to the BTC you get on Poloniex, which could be prefixed POLO.BTC. In both cases you rely on the service provider, CCEDK for OPEN. assets and Poloniex for POLO. assets, to remain solvent in order to back the value of the assets they’ve issued. Because gateways only provide this one service which is normally only one part of running an exchange, one might even argue that they have an easier job of securing their holdings.