New Bitcoin Bridge Design Prioritizes ‘Ownership Preservation’ to Combat Coin Tainting & Enhance NFT transfer
Geneva, Switzerland – Researchers have unveiled “Cardinal,” a novel Bitcoin bridge leveraging BitVM technology designed to address growing concerns about cryptocurrency custody and potential “coin tainting” resulting from cross-chain transfers. The design, detailed in a paper released today on the Cryptology ePrint Archive (2025/2196), aims to ensure users receive the exact Bitcoin they initially deposited when transferring assets across blockchain networks.
The increasing popularity of cross-chain bridges – systems enabling digital asset flow between blockchains – has raised questions about whether coins returned to a user after a “peg-out” operation are, actually, the same coins they initially sent. While cryptocurrencies are theoretically fungible, advanced chain analytics can trace a coin’s history, possibly resulting in users receiving coins associated with undesirable or illicit activity. This poses risks for privacy and could attract money laundering.
“When a user’s coins cross a bridge back and forth, there is a possibility that they are substituted with other coins upon return,” the researchers write. “Chain analytics algorithms…can trace coins’ provenance…highlighting the possibility that users may end up with ‘tainted’ coins.”
Cardinal distinguishes itself by focusing on “ownership preservation,” a concept the team asserts is lacking in existing multi-signature and BitVM bridge designs. By utilizing BitVM, a layer-2 scaling solution for Bitcoin, the bridge facilitates bidirectional transfers between Bitcoin and other DeFi-supporting chains in a trust-minimized manner while maintaining a verifiable link between the original and returned coins.
Notably, the researchers claim Cardinal is the first Bitcoin bridge capable of transferring Bitcoin NFTs, known as Ordinals, across chains, potentially unlocking new use cases and value for these digital assets.The team behind Cardinal includes Lukas Aumayr, Jesus Diaz (Input Output), Dimitar Jetchev (Microsoft, Input Output, École Polytechnique Fédérale de lausanne), and Aggelos Kiayias (University of Edinburgh, Input Output).
