What is Wrapped Bitcoin (WBTC)?

What is Wrapped Bitcoin (WBTC)?

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Wrapped crypto refers to ERC-20 tokens that have the exact same value as the underlying asset. The value can be anchored either directly to the underlying item or via a smart contract that negotiates a constant price.

Wrapped Bitcoin (WBTC) is an ERC-20 currency that on the Ethereum network symbolizes Bitcoin (BTC). A significant feature of WBTC is its connection with the Ethereum ecosystem of wallets, decentralized applications, and smart contracts.

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Wrapped Bitcoin is pegged to Bitcoin, which means that 1 BTC can be wrapped to create WBTC through an affiliate exchange. WBTC was intended to enable Bitcoin holders to engage in Ethereum's popular decentralized finance (“DeFi”) applications.

The BTC reserves of WBTC can be verified, and the project uses a Proof-of-Reserve which validates the 1:1 ratio that exists between Wrapped Bitcoin and Bitcoin, which is held in reserve by custodians.

WBTC is administered by a group known as the WBTC DAO, which has grown to over 40 participants as of December 2020, including DAO members, exchanges, retailers, and wallets.

 

Component Wrapped Bitcoin (WBTC)
Technologies DAO, Smart Contracts
Market Capitalisation $11.8 billion+
Open-Source No
Consensus Mechanism Proof-of-Reserve
Smart Contracts Yes
Founders/Authors BitGo, Kyber Network and Ren
Launch Date 2019
Circulating Supply of Coins 258,940 WBTC
Maximum Coin Supply None
Mining-based Coin? No
Is Wrapped Bitcoin a Stablecoin? Yes
Does Wrapped Bitcoin have a burn rate? Yes
Does Wrapped Bitcoin have a Whitepaper? Yes, the whitepaper can be viewed here

 

Evolution and Development of Wrapped Bitcoin

WBTC was originally made public in October 2018, but it was officially launched until January 2019 by a consortium comprised of BitGo, Kyber Network, and Republic Protocol.

WBTC was instantly usable with popular Ethereum DeFi DApps such as Compound, Dharma, bZx, and dYdX upon introduction.

Users changed $800 million in Bitcoin to WBTC in the 18 months that followed its inception.

 

What makes Wrapped Bitcoin unique?

The following features make Wrapped Bitcoin unique:

  • WBTC is an Ethereum coin intended to boost the liquidity of DeFi applications.
  • Bitcoin owners may earn interest by lending their Bitcoin in the form of WBTC to others.
  • WBTC attempts to bring the best of both worlds together by introducing the significance and fluidity (money) of Bitcoin to the realm of DeFi while also making it useable in that market.
  • One WBTC is the same as one BTC. It is possible to convert BTC into WBTC and vice versa. Because WBTC is an ERC20 token, it transfers quicker than traditional Bitcoin, but its primary benefit is its incorporation with the Ethereum ecosystem, which includes wallets, decentralized applications, and smart contracts.

 

What are the main uses for Wrapped Bitcoin?

Because WBTC is completely compatible with the ERC-20 standard, it may be incorporated into decentralized cryptocurrency exchanges (DEXs), lending protocols, prediction markets, and other autonomous apps, among others (DApps).

Furthermore, because its value always remains tethered to Bitcoin, conventional Bitcoin users will no longer be required to sell their holdings in exchange for an unknown ERC-20 token whose value is prone to fluctuation.

 

What is the future potential for Wrapped Bitcoin?

WBTC's worth is determined by how closely it tracks the bitcoin price, as it is backed 1:1 by a reserve.

WBTC is comparable to other initiatives that manufacture Ethereum tokens that mirror the price of bitcoin. It enables bitcoin holders to connect with the broad array of DeFi DApps available on Ethereum without selling their holdings.

When users wish to discontinue utilizing these services, they merely pay a tiny extra cost to the merchants to get their bitcoin.

There is a lot of interest in WBTC. According to DeFi Pulse, the TVL in WBTC has skyrocketed since the company's start and is currently pushing near the $1.5 billion milestones.

 

Price analysis on Wrapped Bitcoin

Wrapped Bitcoin was initially launched in 2019, and its price analysis over the past two years are indicated as follows:

 

  2019 2020 2021 to date
WBTC Price High $12,510 $28,788 $67,549
WBTC Price Low $3,395 $4,946 $29,349
Market Cap $6.09M $3.35B $15.88B

 

Price prediction on Wrapped Bitcoin

CoinMarketCap estimates that the price of WBTC reached a peak of more than 120% this year, going from $28,973 in January to $64,796 in April, according to the company.

In its long-term bundled bitcoin price projection, Wallet Investor, an algorithmic forecasting program, predicts that the price of bitcoin will rise by 150% in a year and by about 750% by 2026, compared to its latest closing price of $33,345.

WBTC is also regarded as a promising long-term investment choice by DigitalCoin, which is a cryptocurrency exchange. Wrapped Bitcoin (WBTC/USD) is expected to reach 49,785 in 2022 and reach 149,729 by 2028, according to the report, which is more cautious but still positive on the cryptocurrency.

Another tool for analyzing and forecasting WBTC is viewed as an addition to the portfolios of traders and investors by Gov Capital. They predict that the token's price will reach $91,301 in one year and will reach $100,000 in August 2022, respectively.

 

Which wallets are the best option for storing Wrapped Bitcoin?

Wrapped Bitcoin wallet is a software program that allows users to store the necessary data to access their Wrapped Bitcoin (WBTC) funds and associated accounts. This data contains a private key, which is like a password, and a wallet address, also known as a public key, which acts as an account number would.

The following wallet options are the best for Wrapped Bitcoin:

  1. Eidoo
  2. Coinbank
  3. MetaMask
  4. Coinbase Wallet
  5. Green Address

 

1. Eidoo: It is possible to interact with the Bitcoin and Ethereum blockchains using the Eidoo multi-currency wallet, which is free. Most notably, its hybrid exchange makes it simple to trade between ERC20 and ERC223 tokens, which is quite convenient.

The wallet includes several interesting characteristics, such as a high-definition support system, an ICO engine, and token identification. In addition, the wallet is compatible with both mobile and desktop devices. As a desktop app, it is compatible with a wide range of operating systems.

 

2. MetaMask: MetaMask, which is available as a browser extension and as a mobile application, provides users with a key bank, secure login, token wallet, and token exchange—everything that the user will need to manage their digital assets in one place.

 

3. CoinCorner: When it comes to Coin Corner, the key selling point is the simplicity with which you may purchase bitcoin. You may use your debit card to make a payment, like how Coinbase works. However, there is an administrative charge.

To cover administrative costs, CoinCorner imposes a 2.5% administration fee on deposits up to 2000 Euros. Anything beyond that is completely free.

Two-factor authentication is used to ensure security, and the company stores over 90% of its bitcoins in cold storage to provide maximum protection. Private keys are under the jurisdiction of a centralized authority.

 

4. Coinbase Wallet: The Coinbase wallet is a fantastic choice for anyone looking for a cryptocurrency wallet with a high trust score. Eventually, it is expected to reach the next level of security and crypto-transactional effectiveness in the not-too-distant future.

However, despite the wallet's minimal support for virtual currencies, it does support other wallets as well as fiat currency. In comparison to other wallets, Coinbase wallets are the easiest to use and have the safest utility features, which puts Coinbase wallets among the finest cryptocurrency wallets.

 

5. GreenAddress: Even though GreenAddress is simple to use, it is best suited for more seasoned Bitcoin traders. Aside from being open source, GreenAddress has strong security mechanisms to ensure that user payments are always kept safe. 

The mobile wallet incorporates multi-signature and many levels of two-factor authentication, and the wallet is available in 12 different languages.

 

Where can you buy Wrapped Bitcoin?

Wrapped Bitcoin can be purchased from the following crypto exchanges:

  1. FTX
  2. OKEx
  3. KuCoin
  4. Huobi Global
  5. Binance

 

1. FTX: In addition to providing access to the cryptocurrency markets, FTX also provides access to the futures trading markets. However, this represents only a small portion of what the platform has to offer.

FTX is innovative, clever, and has various unique features that have the potential to elevate the bitcoin trading landscape to a higher degree of sophistication.

In the short period since its inception, FTX has positioned itself as one of the top five crypto derivatives exchanges in the world in terms of the average daily trading volume.

 

PROS CONS
Users can quickly and easily swap between different crypto coins United States traders are not accepted
There is an innovative mobile app available to Android and iOS devices USD withdrawals are expensive
Offers a wide range of markets that can be traded There is a lack of live chat support
Low trading fees and the availability of discounts  
Staking can be done from the platform on PoS coins  
Features an innovative NFT Marketplace  

 

2. OKEx: OKEx provides innovative financial services and effective introductions to cryptocurrency for those who are new to the market.

It offers a comprehensive range of services, including flexible borrowing options and opportunities to make interest on tokens that have been staked.

OKEx offers both easy and advanced trading tools, as well as an on-ramp into proof-of-work crypto mining and DeFi liquidity mining as well.

 

PROS CONS
Provides access to a wide range of markets that can be traded US clients are not accepted
Educational resources are offered The fee structure is complex
A broad suite of offerings that are suited to both beginners and professional traders  
There are hundreds of trading pairs that can be exchanged  
There are high staking APY's for PoS tokens  
The Buy/Sell dashboard is user-friendly  

 

3. KuCoin: In recent years, KuCoin has grown to become one of the most popular cryptocurrency exchanges on the planet, thanks in large part to the extensive range of products and services it provides. KuCoin offers several characteristics that distinguish it from other cryptocurrency exchanges.

 

PROS CONS
Exceptionally low trading costs and discounts for paying with KuCoin's native token KCS There are high fees involved when purchasing crypto using fiat
There are over 370 different crypto coins that can be swapped Fiat currency withdrawals are not available
There is an innovative mobile trading app Poor customer service
Traders can buy crypto coins using fiat currencies  
Only partial KYC is required when registering an account  
There is a high liquidity P2P Marketplace offered  

 

4. Huobi Global: Overall, Huobi provides a superior trading experience that is consistent with its high-flying status as one of the world's greatest cryptocurrency exchanges.

However, despite these flaws, Huobi provides where it counts and provides us with access to cryptocurrencies from the Asian market that we would not otherwise be able to trade without hesitation.

 

PROS CONS
Overs a vast range of digital assets that can be swapped Fiat deposits and withdrawals are not supported
The impressive and innovative trading platform offered The account registration process can be tedious and time-consuming
High-level cybersecurity offered  
Strong and dedicated customer service and support offered  
Offers an alternative HADAX exchange where votes are made on altcoins  
Exchange with a reasonable trust score  

 

5. Binance: Binance is the largest cryptocurrency exchange in the world. A variety of new cryptocurrencies may be purchased and sold using this platform. Binance is a cryptocurrency exchange with a lot to offer, and it has developed significantly in recent years.

It currently covers everything from trade to staking, and it even has an NFT marketplace to facilitate transactions.

 

PROS CONS
Extremely low non-instant and instant-buy trading costs Account verification has some issues that must be ironed out
Large selection of digital assets The platform does not serve United States users
A wide range of additional services offered The corporate structure is not transparent
High trust score among other exchanges  
Decent client base which ensures adequate liquidity on the platform  
The platform boasts a large trading volume per quarter  

You can buy Wrapped Bitcoin safely from these cryptocurrency platforms.

Does Wrapped Bitcoin use coin burns?

Yes, Wrapped Bitcoin experiences frequent burns.

Users who have Bitcoin (BTC) and wish to change it into WBTC must do so using Merchants.

Merchants oversee the process involved with either minting or burning WBTC coins by completing identity verification processes to ensure that users are who they claim to be.

In addition to holding onto the real bitcoins being wrapped, custodians are also responsible for the actual minting and burning of tokens on the Ethereum blockchain.

As soon as the WBTC is destroyed, the user's BTC is restored to him from the custody of the custodian. When fresh WBTC is issued, the custodian takes BTC from the consumer and deposits it in a secure location.

 

What is the Staking Process involved with Wrapped Bitcoin?

Staking tokens is a popular DeFi activity that attracts many participants. User money is locked up in a smart contract for a specific length of time under the control of a proof-of-stake protocol in return for a share of the network's block rewards.

Proof-of-stake protocols are becoming increasingly popular. Users may receive incentives on services such as CoinList by exchanging their Bitcoin for WBTC.

 

What can Wrapped Bitcoin smart contracts do?

Control of the WBTC protocol is decentralized and exercised by an autonomous group (DAO). The members of the WBTC DAO are representatives of stakeholders from across the DeFi value chain.

Wrapped Bitcoin DAO members are each in possession of a key to the multi-signature wallet that serves as the system's primary security measure.

Members can use these keys to vote on whether to add or delete other members, as well as to make modifications to the smart contracts that underpin the system.

 

Is Wrapped Bitcoin a Good Investment?

Wrapped Bitcoin is intended to be used as a tool rather than an investment. The only reason somebody would select WBTC over BTC is for an Ethereum ecosystem use case. Apart from that, there is no need to keep WBTC.

Investors seeking exposure to the Bitcoin price may simply purchase Bitcoin on an exchange. 

 

What is the supply and distribution of Wrapped Bitcoin?

The circulating supply of WBTC is 258,940 WBTC, and there is no max supply.

 

  • Fixed or maximum supply can be defined as the total number of coins that can ever be in circulation.
  • Total Supply refers to the number of coins that have been mined, including the missing coins that are no longer in circulation or that have been lost.
  • Circulating supply indicates the total number of coins that are currently in circulation in the crypto market.

 

Is Wrapped Bitcoin a viable Alternative Coin?

Yes, Wrapped Bitcoin is a good Alternative Coin based on these factors:

  • Hacking – Wrapped Bitcoin has not experienced a hacking attempt as it is based on the Ethereum blockchain, one of the most secure chains in the crypto space.
  • Security – Wrapped Bitcoin is overseen, and there are transparent protocols in place to ensure complete transparency with the BTC held in reserve.
  • Price Stability – Wrapped Bitcoin fluctuates according to the value of BTC.
  • Potential Investment – Wrapped Bitcoin, alongside Bitcoin, has a bright future ahead of it in terms of being a store of value.
  • Popularity – Wrapped Bitcoin is one of the most popular alternative coins in the crypto market.
  • Future Uses – Wrapped Bitcoin's unique nature means that it will become extremely popular, giving it a wide range of future uses in DeFi.

 

What are the differences between Wrapped Bitcoin And Bitcoin?

The only difference between Wrapped Bitcoin and Bitcoin is that WBTC is an ERC-20 token that is pegged to the value of Bitcoin in a 1:1 ratio. However, what sets WBTC apart is:

  • It provides high liquidity to exchanges
  • It provides scalability
  • Offers more functionalities than BTC
  • Opens the possibility for staking
  • Offers the ability to yield farm

 

  Bitcoin Wrapped Bitcoin
Price change 20/21 +400% +400%
Market Cap $800 Billion+ $11 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #1 – Original Crypto #17

 

What are the differences between Wrapped Bitcoin and Ethereum?

From the beginning, Vitalik Buterin, as well as the other Ethereum co-founders, planned for the cryptocurrency to be able to support increasingly complex use cases. Solidity (the programming language on which Ethereum is based) is a Turing-Complete programming language that is used to create Ethereum.

This means that it is completely open and versatile, to put it another way. This alone distinguishes it from Bitcoin's restrictive architecture. The smart contract technology that is utilized by Ethereum is what gave birth to the exciting new business known as DeFi, which stands for Decentralized Financial Institutions.

Ethereum and its derivatives have the potential to provide its users with extremely complex financial instruments that are not reliant on centralized, trusted intermediaries for their operation and execution.

The difficulty is that Bitcoin and Ethereum are on separate blockchains that are unable to communicate with one another. Consequently, the greatest obstacle for those desiring to profit from the other side's advantages is that there is such a large disparity between them.

Ethereum tokens are based on the ERC-20 standard, which is incompatible with the Bitcoin blockchain— and vice versa— and hence cannot be used.

Instead, the WBTC developers discovered a means to enable complete integration between the WBTC cryptocurrency and its DeFi equivalents on the Ethereum blockchain, which they called “full integration.” And with this creation came the riches of Bitcoin's enormous liquidity, which made it a very profitable venture.

This is because, before the introduction of tokens such as Wrapped Bitcoin, there was no way for Bitcoin holders to engage in DeFi smoothly. If they wished to do so, they would have to invest the time, money, and opportunity costs necessary to transfer their Bitcoin to Ethereum, which is not an option.

 

  Ethereum Wrapped Bitcoin
Price change 20/21 +880% +400%
Market Cap $460 Billion+ $11 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #2 #17

 

What are the differences between Wrapped Bitcoin and Dogecoin?

One of the most significant distinctions between both coins is that Dogecoin was established as a joke in 2013. Markus and Palmer created dogecoin as a parody of the “Doge” meme, which depicts a Shiba Inu dog, with no intention of it being taken seriously.

Dogecoin, on the other hand, is one of the most widely used alternative currencies. Additionally, both Dogecoin and Wrapped Bitcoin have been referred to as dangerous investments due to the significant volatility of cryptocurrencies in general.

 

  Dogecoin Wrapped Bitcoin
Price change 20/21 +7,300% +400%
Market Cap $22 Billion+ $11 Billion+
Past Hacks None None
Popularity High High
Altcoin Rank #12 #17

 

What are the differences between Wrapped Bitcoin and Neo?

Using smart contracts, NEO aspires to automate the administration of digital assets to establish a distributed network-based smart economy system in the future.

On the other hand, Wrapped Bitcoin is a medium of exchange and an ERC-20 token that can connect Bitcoin holders to the world of smart contracts and DeFi, amongst other features.

 

  NEO Wrapped Bitcoin
Price change 20/21 +160% +400%
Market Cap $1.70 Billion+ $11 Billion+
Past Hacks None None
Popularity Medium High
Altcoin Rank #69 #17

 

What are the differences between Wrapped Bitcoin and NFTs?

Nonfungible tokens (NFTs) are digital assets that each have a unique value, with no two NFTs holding the same characteristics or value as another. Wrapped Bitcoin, on the other hand, is fungible, which means that one WBTC has the same value and characteristics as another WBTC.

 

What are the differences between Wrapped Bitcoin and Solana?

Wrapped Bitcoin is an ERC-20 token that allows Bitcoin users to bridge the gap to access smart contracts and other DeFi and DApps. Solana is one of the fastest, most powerful blockchains that is often called the Ethereum killer.

Solana is more popular than WBTC, and it has a substantial market cap. It is also ranked much higher on the alternative coin market.

 

  Solana Wrapped Bitcoin
Price change 20/21 +9,300% +400%
Market Cap $54 Billion+ $11 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #5 #17

 

What are the differences between Wrapped Bitcoin and Cardano?

Like Solana, Cardano is a powerful blockchain project and a programmable system where developers can build and launch smart contracts and DApps.

The purpose of Cardano is to “create a balanced and sustainable environment” for cryptocurrency exchanges and users.

 

  Cardano Wrapped Bitcoin
Price change 20/21 +2,100% +400%
Market Cap $42 Billion+ $11 Billion+
Past Hacks None None
Popularity Very High High
Altcoin Rank #7 #17

 

What is an ERC-20 Token?

Smart contracts on the Ethereum blockchain are created and issued using ERC20 tokens, which are a standard for establishing and issuing smart contracts.

 

Can Wrapped Bitcoin ever exist outside of being an ERC-20 Token?

No, Wrapped Bitcoin cannot exist outside of being an ERC-20 because it is a tokenized version of another cryptocurrency, in this case, Bitcoin.

 

Is Wrapped Bitcoin a Stablecoin?

Yes, Wrapped Bitcoin is a cryptocurrency-backed stablecoin that tracks the value of Bitcoin. For every WBTC issued, there is BTC that is held in reserve.