More than 20,000 bitcoins are now circulating on Ethereum

More than 20,000 bitcoins are now circulating on Ethereum

By NassiroV | CryptoPress360 | 4 Aug 2020


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Bitcoin is on Ethereum - Ethereum allows you to "tokenize" any type of asset, whether it is stocks, commodities or cryptocurrencies. It is thus possible to create tokens corresponding to a bitcoin. They are called bitcoin wrapped . According to data from DuneAnalytics, there are more than 20,000.

Bitcoins on Ethereum

The smart contracts of Ethereum help create the famous tokens or chips . These non-duplicable and programmable digital entities can represent any asset . Thus, there are many tokens backed by physical gold , silver , or even shares of a building stock .

Recently, a new type of token has appeared : the ERC-20 tokens backed by Bitcoin. There are several, the best known being the Wrapped Bitcoin (WBTC) offered by KyberNetwork and REN.

The advantage of these bitcoins circulating on Ethereum is that they provide some liquidity to decentralized exchanges (via DEX). They can also be used as a means of settlement for other financial applications - dApps.

Their operating principle is as follows:

  • The user wishing to buy their tokenized bitcoins submits their request to the issuer;
  • The latter will put bitcoins in escrow corresponding to the tokens;
  • The agreement is formalized within a smart contract ;
  • The body holding the bitcoins creates the corresponding tokens and distributes them to the buyer.

Wrapped Bitcoins Ethereum WBTC How the WBTC works - Source: Wbtc.network

More than 20,000 BTC tokenized on the blockchain

According to data from Dune Analytics , the market for tokenized bitcoins on Ethereum now represents more than 20,000 BTC . This equates to around 190 million dollars . Remember that for some time now there have been more bitcoins in circulation on Ethereum than on the Lightning Network .

bitcoins on Ethereum ethBTC supply Evolution of Ethereum bitcoin capitalization (ethBTC) - Source: Dune Analytics

Note the extreme dominance of the WBTC . They represent 15,521 BTC , or 76.5% of the market.

bitcoins on ethereum ethBTC market

The volumes exchanged daily on decentralized exchange platforms remain low. They are however sharply increasing , peaking at over 2,500 ethBTC in trading volume .

ethBTC trading volume daily

Bitcoin tokenized on Ethereum has a definite advantage for network users. They allow you to settle bitcoin trades and lower the cost of certain transactions. Indeed, it is enough to pay the fees of Ethereum to exchange bitcoins on the network. This opens the door to more decentralized exchanges. In addition, the safekeeping of locked “real” bitcoins is handled by reputable companies, like BitGo.


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NassiroV
NassiroV

Hi, and welcome to my blogs :)! ​I’m Nassir, a thirty-something guy who loves to travel and write, especially about Crypto and Blockchain. I have been blogging and trading cryptocurrencies for a while. I hope that you find my articles beneficial to you.


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