Paper 2025/2196

Cardinal: Bridging Bitcoin with Ownership Preservation

Abstract

Cross-chain bridges have emerged as key components of blockchain infrastructure, enabling digital assets to flow across chains and benefit from non-native features. While early bridge designs were fraught with brittle trust assumptions, more recent designs, even within Bitcoin's script limits, can operate in a trust-minimized setting. Given this ever-increasing expansion of blockchain bridge systems, a critical question regarding custody arises: When a user's coins cross a bridge back and forth, is there a possibility that they are substituted with other coins upon return? Naturally, if cryptocurrencies were truly fungible, this would not be a consequential event. Nevertheless, chain analytics algorithms as applied to Bitcoin, Ethereum, and other popular chains can trace coins' provenance up to their minting event, thereby highlighting the possibility that users may end up with "tainted" coins upon receiving their coins from a peg-out bridge operation. Similarly, this also highlights the possibility that bridges could become an attraction for money laundering. To address these considerations, we put forward the concept of ownership preservation for blockchain bridges and we observe that existing multi-sig and BitVM bridges fail to satisfy it. We then present a novel BitVM-based bridge that enables Bitcoin to connect bidirectionally with another DeFi supporting chain in an ownership-preserving and trust-minimized manner. We also observe that our ownership-preserving design is the first Bitcoin bridge to facilitate the transfer of Bitcoin NFTs, Ordinals, across chains, extending in this way their potential value and use cases.