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What is Wrapped Bitcoin (WBTC)?

Unwrap the mystery: discover the power of Wrapped Bitcoin (WBTC) - the future of Bitcoin or just another crypto fad?

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Bitcoin first disrupted the financial industry in 2009 but has since been followed by other cryptocurrencies trying to do the same. 

Some have been more innovative than others, while we do still see tokens like BCH and BSV succeeding, many question whether these tokens are credible for just forking from Bitcoin. Then came Wrapped Bitcoin, but there is a massive difference between these Bitcoin variants. 

What is Wrapped Bitcoin?

Tokens like BCH and BSV were launched to be better than Bitcoin, while debatable to this day, Wrapped Bitcoin was created to allow Bitcoin to be used on other blockchains. Wrapped Bitcoin's goal has never been to be Bitcoin, to be better than Bitcoin, or to take Bitcoin’s community. Wrapped Bitcoin was simply created to provide more utility to those using Bitcoin within the Ethereum blockchain ecosystem. 

What are Wrapped Tokens?

Wrapped tokens provide users with the opportunity to use cryptocurrencies like Bitcoin and Ethereum on other blockchains, while their prices remain pegged ("wrapped") to that of the original coin essentially creating a more tradable version of the coin.

For instance, with Wrapped Bitcoin tokens, Bitcoin can now be used within the Ethereum ecosystem and wrapped Ethereum-based altcoins can be used on the Solana network or any DeFi applications. There is also a Wrapped Ether which can be traded on decentralised exchanges or decentralised finance (DeFi) applications.

Let’s see how WBTC came to be, what benefits it offers, and why it is gaining popularity in the crypto assets space. 

The beginning of Wrapped Bitcoin  

It is widely conceded that stablecoins were the first wrapped tokens to come into existence, due to their pegging to a fiat currency. However, the first crypto-based wrapped token, Wrapped Bitcoin, was launched in January 2019, roughly 10 years after Bitcoins' initial release.

Wrapped Bitcoin is an ERC-20 token on the Ethereum mainnet (therefore requiring Ethereum wallets for storage) and is backed at a 1:1 ratio to the original cryptocurrency, meaning 1 WBTC is equivalent to 1 BTC.

A key benefit of Wrapped Bitcoin over Bitcoin is its integration within decentralized finance protocols, Ethereum's blockchain and ETH-based dapps, wallets, and smart contracts. To convert your BTC to WBTC, you would need to wrap the token using a bridge. 

Wrapped Bitcoin came from the collective efforts of major players within DeFi, including projects like MakerDAO, BitGo, Dharma, Set Protocol, and more. Wrapped Bitcoin is now under the control of a DAO, a decentralized autonomous organization, by the name of WBTC DAO. The ultimate goal was to bring more liquidity into Ethereum’s network through Bitcoin.  

How to get and use Wrapped Bitcoin WBTC

The only way to acquire WBTC is to trade it on a decentralised exchange (DEX) by swapping your BTC for WBTC. 

The process of minting WBTC tokens is done through verification procedures concluded by merchants. WBTC is created by storing funds in a custodian wallet in return for WBTC. When users want to convert their WBTC to BTC, the tokens are burnt and the BTC is returned from the wallet. It is a fairly simple process when done through a trustworthy source. 

WBTC gives one the ability to interact with the whole Ethereum network, inclusive of dapps, games, smart contracts, wallets, and more. WBTC will also allow one to be a part of a greater DeFi ecosystem, enabling them to partake in yield farming, token swapping, liquidity pools, lending, borrowing, and more. The utility is endless as Ethereum continues to evolve. 

The future of the Wrapped Token (WBTC)

Is it extremely innovative? Maybe not. Does it bridge the gap in allowing Bitcoin holders to utilize and benefit from other blockchains' synergies? Yes. It has more use cases than it is given credit for, which is why we wanted you to learn more about it.

This is not financial advice, but a look at some of the possibilities and projects out there finding success. There is no saying whether Wrapped BTC will be as big of a success story as BTC, especially since it's a wrapped version of BTC. One thing we do know is that wrapped tokens present additional benefits on top of existing tokens, and that's something worth learning about.


This article is for general information purposes only and is not intended to constitute legal or other professional advice or a recommendation of any kind whatsoever and should not be relied upon or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations or undertakings about any of the content of this article (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content), or any content of any other material referred to or accessed by hyperlinks through this article. We make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up-to-date.


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