Almost everyone—even those who have never dealt with cryptocurrency—has heard of the term Bitcoin. Everyone knows that it’s a form of digital currency and crypto enthusiasts know more. But what about Wrapped Bitcoin? In this video, we’ll be talking about everything you need to know about wrapped Bitcoin.
How It Started
Wrapped Bitcoin was announced in October 2018 and officially launched in January 2019, but it took a lot more time to develop and perfect.
The people responsible for its development were BitGo Inc, Kyber Network, and Ren, formerly known as Republic Control. Together, these companies are managed by a decentralized autonomous organization, or DAO, allowing them to vote on adding or removing custodians and merchants. These companies are actually major players in the DeFi ecosystem.
What Is It?
Bitcoin started over a decade ago, and the world of cryptocurrency has since improved.
When developers were able to create a thriving decentralized finance ecosystem, also known as DeFi, developers still wanted to get a slice of the pie with Bitcoin. This is where WBTC comes in. It’s an ERC-20 token that represents Bitcoin in the world of DeFi.
How Does It Work?
To put it simply, one Wrapped Bitcoin equals one BTC. Values are convertible, but since WBTC is an ERC-20 token, it’s faster to transfer it than a normal Bitcoin.
Because the WBTC is compatible with DeFi and the Ethereum blockchain, it’s integrated into numerous decentralized apps, smart contracts, and Ethereum wallets.
How Is A Wrapped Bitcoin Made?
For a Bitcoin to be converted into a WBTC, users must interact with merchants. These merchants facilitate the process of minting or burning WBTC tokens to confirm the user’s identity, and custodians hold the Bitcoin for them, then minting tokens on the Ethereum blockchain.
To put it simply, you hand over your Bitcoin token to a custodian, and they keep it for you, in return providing a different coin that works in the Ethereum blockchain with the same value.
What do you think about the Wrapped Bitcoin? Share your thoughts in the comment section – we’d love to hear them!
These videos are for educational and entertainment purposes only – THIS IS NOT FINANCIAL ADVICE!
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