In 2017, with the entry of global players, eliminating the problem of fast transfer between ETH and BTC was on the agenda. As such, WBTC was launched. In other words: Wrapped Bitcoin is a tokenized, Ethereum-based form of Bitcoin (BTC).
WBTC is compliant with ERC-20, the core compatibility standard of the Ethereum blockchain, allowing Ethereum to be fully connected to decentralized exchanges, crypto lending services, prediction markets, and other ERC-20-enabled decentralized financial ecosystems (DeFi).
Why WBTC is important?
WBTC (Wrapped Bitcoin) is important because it allows Bitcoin to be used on Ethereum-based decentralized applications and platforms. WBTC is an ERC-20 token that represents Bitcoin, which is an asset that is known for its security, reliability, and scarcity. This means that WBTC combines the benefits of Bitcoin and Ethereum, offering users the ability to access decentralized financial applications and benefit from the security of Bitcoin while leveraging the decentralized infrastructure of Ethereum. As a result, WBTC helps to expand the use case of Bitcoin and increase its accessibility in the Ethereum ecosystem.
Advantages of Wrapped Bitcoin
Wrapped Bitcoin offers certain benefits over other cryptocurrencies.
Access to Ethereum’s DeFi Ecosystem
The easiest advantage of Wrapped Bitcoin is that users can easily transfer their assets between the Bitcoin and Ethereum blockchains, giving them access to multiple DeFi products and services on the Ethereum network that would not be available using just Bitcoin.
Faster Transactions
Transactions on the Ethereum network are quicker compared to the Bitcoin network. Wrapped Bitcoin, being settled on the Ethereum blockchain, allows for quicker movement between Ethereum wallets and exchanges.
Improved Liquidity
Many decentralized exchanges experience low liquidity, leading to higher price volatility or users being unable to sell their tokens. Wrapped Bitcoin provides increased liquidity in the Ethereum ecosystem by enabling the conversion of Bitcoin to WBTC.
Is Wrapped Bitcoin Equivalent to Bitcoin?
Wrapped Bitcoin is equivalent in value to Bitcoin, as its price is tied to Bitcoin’s price, so there is no potential for a higher return. Nevertheless, Wrapped Bitcoin offers additional benefits, such as faster transaction speeds and access to the Ethereum DeFi ecosystem, making it an attractive option for Bitcoin holders who want to use DeFi apps and smart contracts.
FAQ
Here are some of the most typical queries regarding Wrapped Bitcoins.
How Many Wrapped Bitcoin?
As of January 2023, there are more than 188,000 wrapped Bitcoins in circulation.
Can I Buy Wrapped Bitcoin?
You can buy wrapped Bitcoins on a number of cryptocurrency exchanges. For instance, BitPay, CoinList, and Coinbase.
DeFi: What Does That Mean?
Decentralized finance is known as DeFi. It refers to blockchain-based substitutes for established intermediaries like banks.
Without the need for an intermediary, DeFi apps offer financial services and products based on blockchain networks like Ethereum.
Who Invented Wrapped Bitcoin?
Kyber, Ren, and BitGo all contributed to the creation of Wrapped Bitcoin.
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