Wrapped Bitcoin: A New Way To Use BTC On The Ethereum Network
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Wrapped Bitcoin is a new project aimed to connect BTC to the Ethereum Blockchain. Developed for both traders and decentralized application developers, this service already works with lots of DeFi protocols, such as Kyber Network, Dharma, and AirSwap. Here is Wrapped Bitcoin explained.
What Is Wrapped Bitcoin?
Wrapped Bitcoin is a project founded at the beginning of 2019. It has an ERC-20 token called WBTC. It represents Bitcoin on the Ethereum network. One WBTC equals one BTC. It means that BTC and Wrapped Bitcoin price is the same.
WBTC has lots of pros:
- Extra liquidity on the Ethereum network and all its services.
- More freedom and flexibility in financial management for BTC holders.
- Transactions are much faster and cheaper than in the Bitcoin network.
Although this token is useful, it’s not as protected as BTC. Even the Ethereum network founder Vitalik Buterin is concerned about its trustworthiness. So, it’s better to be careful and protect your data yourself while using WBTC.
Who Can Use Wrapped Bitcoin?
WBTC is useful for:
- Organizations. Exchanges platforms, wallets, and payment services can easily process different forms of transactions. WBTC combines the advantages of Ethereum and Bitcoin while simplifying the processing of tokens using only Ethereum services.
- Traders. Decentralized exchanges are usually limited to ERC-20 tokens, so they suffer from low liquidity and insufficient trading volumes. Thanks to WBTC, they can significantly increase the flexibility of funds management. The Ethereum network processes transactions faster than the Bitcoin network, so the movement of assets between exchanges is also faster.
- Decentralized applications (DApps). Bitcoin payments can now be used in exchange protocols, forecast markets, or even in micro-blogging dApps.
Wrapped Bitcoin is promising, and recent news is proving that. According to Cointelegraph, $900 million worth of BTC was tokenized using this coin over August and September. So, today WBTC represents one-third of the total value locked of Bitcoin. On October 26, WBTC was traded for 13,348.00 USD.
All in all, Wrapped Bitcoin is a new token already used by traders and companies. Since it’s supported by many merchants, it’s user base is growing. Moreover, it’s much cheaper to make transactions with this token than to use the Bitcoin network.
The content of this article is for informational purposes only and should not be construed as investment advice. We ask you to do your research.
Originally published at https://coinjoy.io.