Today, cryptocurrency exchange Coinbase launched “Coinbase Wrapped Bitcoin” (cbBTC), an ERC-20 token backed 1:1 by Bitcoin.
The exchange announced the new token launch to improve Bitcoin's decentralized finance (DeFi) usage. It will enable Bitcoin usage in Ethereum and Coinbase Base dApps.
Coinbase says cbBTC is an ERC-20 token, the Ethereum blockchain's mainstream token standard.
Coinbase will back each cbBTC token 1:1 with Bitcoin. The token will retain its value and be redeemable for Bitcoin. In a release, the exchange claimed users may convert BTC to cbBTC and vice versa without worrying about value differences.
The exchange says cbBTC would work on Base and Ethereum. Coinbase plans to introduce cbBTC to other blockchains soon, expanding its usefulness.
The statement from Coinbase stressed the relevance of Bitcoin in onboarding new cryptocurrency users.
Bitcoin, the oldest and most popular crypto asset, helps onboard people. Coinbase has expanded Bitcoin's usefulness by integrating the Lightning Network for quick, low-cost payments and now cbBTC. Starting today, millions of Coinbase clients may safely access Ethereum-based financial applications using Bitcoin.
He notes that “WBTC” has helped promote DeFi adoption over the years, but it has not kept up with tech and governance changes.
“Recent changes have made everyone aware of WBTC's counterparty risks, so the industry should definitely have better market alternatives,” Galansky says.
