WBTC is Wrapped Bitcoin, an ERC-20 token maintaining a one-to-one value with Bitcoin.
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What Is Wrapped BTC (ERC20)?
WBTC is Wrapped Bitcoin, an ERC-20 token maintaining a one-to-one value with Bitcoin. The stablecoins that crypto holders are used to are usually backed by fiat money so WTBC is a meta cryptocurrency in this aspect.
WBTC is a bridge connecting the two massive pillars of blockchain – BTC and ETH. WBTC strives to combine the best of both worlds by bringing the value and liquidity of Bitcoin and making it usable in the DeFi world. As an ERC-20 token, WBTC and its transactions are faster than the BTC ones. However, the main advantage of WBTC is its integration into the world of Ether, dapps, and smart contracts.
Wrapped Bitcoin was introduced to the world as a collaborative project between major players in the DeFi ecosystem such as BitGo, Ren, Dharma, Kyber, Compound, MakerDAO, and Set Protocol. The project is currently controlled by a Decentralized Autonomous Organization (DAO) called the WBTC DAO.
Pros and Cons of Wrapped BTC (ERC20)
Advantages of WBTC
WBTC is the first token that connects Bitcoin to the Ethereum chain. Currently, there’s a high return on investment for WBTC. The coin is definitely at the peak of its rise, as also proven by its growth up to Rank 15 on CoinMarketCap. WBTC has a trustworthy community of partners, including Kyber Network, UniSwap, HitBTC, AAVE, and tens of the notorious names known within the world of crypto. Being associated with such partners and Bitcoin itself, WBTC can ensure security and credibility as it won’t fail or result in a scam. Wrapped Bitcoin is also endorsed on almost a hundred exchanges, all with high confidence. It can be traded with numerous other cryptocurrencies and stored ubiquitously on any compatible wallet.
Disadvantages of WBTC
For new users, it might not be clear why use WBTC instead of Bitcoin or any of them at all. There’s also a cryptocurrency called imBTC which performs the same function as Wrapped Bitcoin. Some argue that it will never have the same level of security or truthfulness as the original because it relies on people and organizations to manage the system instead of pure code. WBTC also has a high price for one unit so the so-called “whales” or just people with more financial opportunities can get a hold of large sums and influence the market. From a technological point of view, Bitcoin’s blockchain technology is primitive despite its senior status in the community. The future of WBTC also depends on what the developers decide to do with it.
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