According to a news article, a new cryptocurrency backed by Bitcoin (BTC), dubbed Wrapped
Bitcoin (WBTC), was launched today on the Ethereum blockchain. This new crypto is the
brainchild of BitGo, Kyber Network and Ren among major partners.
Wrapped Bitcoin is an ERC-20 token and is the first of its kind to be backed 1:1 with Bitcoin.
ERC-20 tokens can be used solely on the Ethereum blockchain but provides numerous benefits,
such as, preparing a token structure that allows creators of a cryptocurrency to focus on the
crypto itself rather than its coding part.
The firm had stated during the announcement of the token’s development, in October last year,
that the token would provide the customers a “wide variety of new decentralized use cases
including on decentralized exchanges (DEXs), as collateral for stablecoins or lending,
for payments and flexible smart contracts within the Ethereum ecosystem.”
The WBTC website states that “today, the majority of trading volume takes place on centralized
exchanges with Bitcoin. WBTC changes that, bringing Bitcoin’s liquidity to DEXs and making it
possible to use Bitcoin for token trades.”
Another advantage of choosing the ERC-20 token is that it could be used to create smart
contracts for Bitcoin.
Decentralized exchanges like DDex, Loopring, RenEx, and Dolomite, would be able to benefit
greatly from both – Ethereum’s smart contracts and Bitcoin’s liquidity, by incorporating WBTC
along other cryptos.
Kyber Network and Ren will be the initial liquidity providers, starting the circulation of pre-
mined WBTC tokens from their own Bitcoin reserves.
Initially, eight firms/exchanges will support WBTC and BTC conversions – AirSwap, Dharma,
GOPAX, ETHfinex, Kyber Network, Prycto, Ren, and Set Protocol.
At the time of writing, according to data from Coinmarketcap, WBTC was priced at $3,483,
slightly ahead of BTC which was trading at $3,464.
The WBTC platform will also provide live monitoring of token transactions on its dashboard, in
addition to the addresses of users participating in the transaction.