“Wrapped Bitcoin” (WBTC) is an Ethereum-based token backed by BTC. The currency is a joint initiative by blockchain security firm BitGo, Kyber Network liquidity protocol and others who made the announcement on 31st January.
Back in October 2018, BitGo announced that it was developing a coin backed 1:1 with BTC and in is statement said that a wrapped Bitcoin would provide users with a “wide variety of new decentralized use cases including on decentralized exchanges (DEX), as collateral for stablecoins or lending, for payments and flexible smart contracts within the Ethereum ecosystem.”
According to the launch press release, WBTC is an ERC-20 token designed to be used solely on the Ethereum platform. It also suggests that the wrapped coin would allow for new applications and use cases for Bitcoin on the Ethereum network: “By bringing Bitcoin’s liquidity to Ethereum, WBTC also makes it possible for traders to use Bitcoin value for token trades on decentralized exchanges.”
The network’s announcement also states that all WBTC smart contracts have been audited by third-party firms, and that proof of reserve showing an exact 1:1 ratio of minted WBTC to BTC is observable on-chain.
CoinMarketCap is already listing the WBTC trading price, which at the time of writing was $3,469.54.
How does WBTC work?
According to the website: “To receive WBTC, a user requests tokens from a merchant. The merchant then performs the required KYC / AML procedures and verifies the user’s identity. Once this is completed, the user and merchant execute their swap, with Bitcoin from the user transferring to the merchant, and WBTC from the merchant transferring to the user.”