Wrapped Bitcoin (WBTC) went live today on the Ethereum network.
Wrapped Bitcoin is an ERC-20 token backed 1:1 with Bitcoin (BTC). In simple terms, it is a collateralised stablecoin like Tether or USDC, but rather than being backed by USD in a bank account, it is backed by BTC in a vault.
Wrapped Bitcoin (WBTC) is now live!
There are now 65.4217 BTC represented on the Ethereum blockchain.
Congrats to @BitGo, @renprotocol, @KyberNetwork, @SetProtocol, @DharmaProtocol, @airswap, @RadarRelay, @dydxprotocol, @blockfolio, and everyone else that made this possible.
— Staked (@staked_us) January 29, 2019
At the time of writing, the new token currently has 65 BTC (or $220,000) locked into its smart contract. This BitGo-backed venture holds BTC in cold storage to prove its crypto reserves, with Xapo used as their custodian.
The project state that, “The proof of reserve is on-chain, which shows the exact 1:1 between minted WBTC tokens and Bitcoin stored by the custodians.”
“When WBTC token holders redeem their tokens for Bitcoin, the tokens are burned. The minting and burning of tokens is in turn tracked and verifiable on the blockchain.”
New dashboard
Users can check the statistics of the new token via the WBTC dashboard, which features a range of live data including the WBTC order book (the record of all minting and burning of tokens). Users can also view the details of the partners of the project including merchants, custodians, exchanges, and DAO members, and can even audit the custodians.
These regular audits are used to show transparency through publicly viewable and verifiable transactions.
A community of decentralised projects
In October 2018, Coin Rivet reported that use cases for the new token will be a number of decentralised projects on the Ethereum network including Kyber Network, Republic Protocol, MakerDAO, Dharma, Airswap, IDEX, Compound, DDEX, Hydro Protocol, Set Protocol, Prycto, RadarRelay, and Gnosis.
In recent months, we have seen an increase in usage of the Lightning Network. This network at its core is just a verifiable ‘pegged’ chain that allows for no-fee microtransactions.
Can Wrapped Bitcoin now look to also use the same sort of approach and give utility to its community of decentralised Ethereum projects?
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.