Wrapped Bitcoin Explained in 60 Seconds

By CryptoSlackers | CryptoSlackers | 4 Dec 2020

Bitcoin, which operates on the Bitcoin blockchain, cannot be easily transacted with on other blockchains, such as Ethereum.

This problem is solved by "wrapping" Bitcoin into an ERC-20 token that functions freely on the Ethereum blockchain.

When a user deposits BTC with a 'merchant', the merchant mints new WBTC for the user, and sends the deposited BTC to a 3rd party custodian to be held in a transparent, audited account.

When WBTC is redeemed for BTC, the merchant 'burns' the WBTC, and the custodian sends an equivalent amount of BTC back to the user.

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Resources

https://cryptoslackers.com/wrapped-bitcoin-explained-in-60-seconds/

Cryptocurrency Bitcoin (BTC) Crypto Blockchain Wrapped Bitcoin (WBTC)

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CryptoSlackers

CryptoSlackers is a website, YouTube Channel, and Slack chat group focused on educational content and smart, responsible crypto investing.

CryptoSlackers

CryptoSlackers is a website, YouTube channel, and Slack chat group focused on educational cryptocurrency content and smart, responsible investment strategies.