Wrapped Bitcoin Project Debuts on Ethereum Network

By Prashant Jha

The wrapped Bitcoin project is a combined effort of various developers who have created a token called Wrapped Bitcoin, based on the Bitcoin core. The token was launched on the Ethereum network on January 30 and it has already been listed on various exchanges.

The collaborated effort of Bitgo, Kyber Network, and Ren, started back in October to create an ERC-20 token called WBTC, finally came into existence. The WBTC was aimed to bring in more liquidity to the decentralized ecosystem of both Bitcoin Blockchain and Ethereum Blockchain.

The developers behind the project have said that the WBTC would be valued against the original BTC with 1:1 ratio. Developers also believe this could mark the beginning of a new tokenization era on cross platforms, and hope it would enhance the DApp creation as well.

One of the creators explained,

“WBTC will allow the Ethereum network to be leveraged to enable new applications and use cases for bitcoin — WBTC standardizes bitcoin to the ERC20 format, so dapps such as Compound, Dharma, Dydx, Gnosis, Maker, Set protocol and more can leverage bitcoin for decentralized lending, margin trading, and derivative markets,”  “Further compelling new applications and use cases will be identified, explored and implemented as the ecosystem continues to grow and actively innovate.”

WBTC Would Work on Proof Of Reserve

The community backed project would be centralized to a certain extent and works on the principle of stable-coins. Bitgo would hold the key to mine new tokens, and the WBTC would make use of Proof of Reserve just like many other stablecoins.

The developers discussed that the new ERC-20 token WBTC which would be staged against the BTC at 1:1 ratio, make use of proof of reserve, the concept which has been in the public domain for long. It was being used by various banks and other institutions in bond creation, and lending out loans.

This could pave the way for tokenization of various other real-world commodities and the creators are confident of the various technologies behind the WBTC. The creators also said that their smart contracts were audited by various third-party auditors and they are affirmative on its success.

“The first WBTC on the main Ethereum chain have been minted and burnt which can be observed on-chain on Ethereum  — The proof of reserve is on-chain, which shows the exact 1:1 between minted WBTC tokens and bitcoin stored by the custodians,” the WBTC announcement notes.