What are the differences between transfer, swap, and bridge in crypto?
When using a crypto wallet, you may often come across these three terms. At first glance, they all seem to involve “transactions.” Yes, they all involve transactions, but they are entirely different. This article introduces the meaning behind each term.
TRANSFER:
Transfer=Move crypto within the same blockchain.
“Transfer” literally means passing something from your hand to another person’s hand. Whether it’s money, goods, or currency, it can be transferred. In a crypto wallet, the transferred item is usually “virtual currency” and must occur within the same blockchain. When you transfer, the recipient receives exactly what you originally had.
SWAP:
Swap=Exchange A crypto for B crypto.
“Swap” means exchanging one item for another, turning what you have into something you want. To perform a swap, you first need a counterpart. Then you select the item you want to give and the item you want to receive. In the process of swapping, we usually hope that the two items are of equal value to avoid significant losses during the exchange.
However, finding a counterpart for the swap is not easy, so some resource-rich individuals may step in as intermediaries to help you find trading partners. Alternatively, they might have enough assets to continuously provide the items others want.
An intermediary usually charges a fee for providing this swapping service. This fee may include handling charges, item quotations, and market value, from which they gain profit.
In a real-life scenario, if you have two motorcycles but want a car (assuming the value of the two motorcycles is approximately equal to the car), you can find a used car dealer to help you find someone willing to exchange. The dealer might have already purchased a car from someone else, making the swap possible.
The detailed process of swapping might be as follows:
- The used car dealer first buys two motorcycles from someone else.
- You express your intention to trade the car.
- The dealer estimates that the value of the two motorcycles is roughly equal to the car.
- You agree to proceed with the transaction.
- The dealer charges you a service fee.
From the dealer’s perspective, this involves two transactions. But from your perspective, you exchange two motorcycles for a car after paying some fees.
BRIDGE:
Bridge=Move crypto from A blockchain to B blockchain.
A crypto bridge is similar to transfer, but transactions usually cannot be directly made between different blockchains. Imagine if you have a car and want to move to another country and have a car there. What can you do?
You can ship the car to the other country via a shipping company, and when you arrive, you can retrieve it from the company and drive it there.
A bridge works similarly, helping you transfer your assets to a different blockchain.
