Today we can see hundreds of cryptocurriencies and thousands of ERC-20 as well as other tokens. But there are few tokens which are actually provide innovative solutions for multiple sectors. WBTC is one those few ERC-20 tokens providing solutions for problems of Bitcoin's blockchain.
If you're following bitcoin technically, then I think you should know that there are several issues of Bitcoin's blockchain, mainly the transaction speed. So in this article we'll see what is WBTC and how it's solving the issue.
What Is WBTC ?
WBTC stands for Wrapped Bitcoin and is a ERC-20 token. If you don't know what is ERC-20 token then just note that these are simply tokens developed on Ethereum network.
So the WBTC is an ERC-20 token similar to Bitcoin i.e 1 WBTC = 1 BTC, WBTC acts as an bridge between Ethereum network and Bitcoin, which brings them together. This integration helps dApps boost. You can convert Wrapped Bitcoin into Bitcoin and vice versa. You can lend & borrow WBTC using Compound and also use it for margin trading on bZx Fulcrum dApp.
Who Invented WBTC ?
WBTC was launched in January 2019 on Ethereum mainnet. It was brought to the world as a collaborative project of major DeFi players like Kyber Network, BitGo, Ren, Compound, MakerDao & Set Protocol. The main purpose of this collaborative project is to bring large liquidity into the Ethereum network as Bitcoin is brought into the game. Currently this project is controlled by WBTC DAO, which is a Decentralised Autonomous Organisation (DAO).
Is There Anything Special ?
Yes, definitely there's always something special about every crypto projects. But specifically WBTC is very special for DeFi apps as you can imagine the names behind this project.
As collateral is one of the most important thing in world of DeFi dApps developed on Ethereum. Platforms like Compound & MakerDAO requires users to lock their crypto assets and borrow other assets. As you all know that the price of Ethereum is much less than Bitcoin, this thing limits the growth of these DeFi platforms. So the WBTC brings Bitcoin onboard, which brings more liquidity to the platforms and creates more sources of collateral for these dApps.
When I mentioned that WBTC is similar to BTC, I was specially talking about price similarities. But as WBTC is copy of Bitcoin and it uses Ethereum blockchain there are differences between BTC and WBTC.
WBTC cannot provide the same level of security and trustlessness as it is relies on people & organisations to manage system whereas original BTC is completely rely on pure code.
To minimize this gap between BTC and WBTC & increase the trust & provide transparency, WBTC undergoes regular audits and publish all on-chain transactions & verification for Bitcoin & Ethereum network. Anyone can check the transaction details from this on-chain data.
What Will Be The Future
The future of WBTC mostly relies on how developers use it in their dApps instead of individual uses. As the WBTC was actually developed by the major DeFi protocols for their own growth, the future of WBTC will also be depended on these and new emerging DeFi platforms. Today there are more than 11300 WBTCs are in circulation which takes the market capitalisation of WBTC to $ 104,758,057 USD.
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A very informative article. Everyone must read this. Keep writing💕