What is Wrapped Bitcoin
Wrapped Bitcoin (WBTC), also referred to as “Wrapped Bitcoin” or “Wrapped Bitcoin,” is a project created by a group of developers and organizations to facilitate interaction between different blockchain networks.
WBTC is an ERC-20 token that reflects the price of Bitcoin – one WBTC equals one BTC. One BTC can be converted to WBTC and vice versa. Token rollover is faster than normal Bitcoin, but the key advantage of WBTC is its integration into the world of Ethereum wallets, decentralized applications (dApps), and smart contracts.
WBTC was launched on October 26, 2018, as a collaboration between BitGo, Kyber Network, Ren (formerly Republic Protocol), and other partners that aim to leverage the advantages of Bitcoin in the Ethereum blockchain. Wrapped Bitcoin launched on the main Ethereum network in January 2019.
One of the main problems cryptocurrency users constantly face is that there aren’t many bridges between the different circuits that connect Ethereum and Bitcoin. The creators of WBTC insist that the cryptocurrency helps to optimize Bitcoin for decentralized use cases within the Ethereum ecosystem by standardizing Bitcoin to ERC-20.
A decentralized autonomous organization now oversees the project (DAO) called the WBTC DAO.
How are WBTC tokens produced?
The governing members of the WBTC DAO decide on major updates and changes to the protocol, as well as who can take on the role of merchants and custodians who manage the system.
Users who have BTC and want to convert it to WBTC must interact with traders. Merchants initiate the process of minting or burning WBTC tokens by performing verification procedures to confirm the identity of users.
Custodians hold the actual ” packaged ” BTC and perform the actual minting and burning of tokens on the Ethereum blockchain. When WBTC is burned, the BTC is returned to the user by the custodian. When a new WBTC is minted, the BTC is taken from the user and stored by the custodian.
In other words, WBTC for BTC is like USDT for the US dollar. Both circumvent incompatibility by a new, compatible digital asset directly tied to the original.
To take full advantage of both Wrapped Bitcoin and low gas fees, converting from WBTC to Polygon is also very popular. After completing a conversion using one of these bridges, an additional step will be required – connecting a wallet to the Polygon Bridge.
