What is Wrapped Bitcoin (WBTC)?

By changteck | thecryptorunner | 8 Jul 2021


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When it comes to cryptocurrencies, Bitcoin has long been the gold standard. Many people buy Bitcoin with the hope that it will rise in value over time.

However, there are several other cryptocurrencies or “altcoins” out there that have the potential to gain rapidly in value as well.

Ethereum is one such example. Exploding more than 500% from 2020 to 2021, it reached an all-time high of $4,165 just over 2 months ago.

With its native network consisting of different protocols like ERC-20, developers have delved into DeFi Protocols to gain more yield on their Ether.

How can you then, as a retail investor make use of this opportunity to gain more on your Bitcoin and Ether since they run on different networks?

Introducing Wrapped Bitcoin (WBTC)!

What is Wrapped Bitcoin (WBTC)?

The concept behind Wrapped Bitcoin (WBTC) is simple: a token that is Bitcoin where you still maintain ownership, but using it on a different Blockchain.

Think of Blockchains like different card providers. Visa, Master, Amex and Discover are some examples. Currencies USD, SGD, MYR and JPY serve as BTC and ETH parallels.

The latter serves the same function of providing people like you and me the opportunity to pay merchants of the respective countries for products & services utilized, but you can't expect to eat in a restaurant in Japan and pay with SGD right? However, by paying with your Visa or Master card, you are essentially forming 'a bridge' between currencies so that the merchant can receive JPY, but you pay in SGD.

Bitcoin (in this case, it is SGD), can run on the Ethereum Network (JPY) through 'wrapping' it with consensuses from Ethereum (Visa).

WBTC still possess the main features of Bitcoin, such as being the token with the largest volume in the cryptocurrency market. However, it will also have additional features, such as the ability to participate in DeFi Protocols that run on smart contracts, potentially gaining the retail investor more gains on their investments.

How to buy Wrapped Bitcoin (WBTC), or wrap Bitcoin?

There are 2 ways that you can go about owning the asset:

  1. Buying it on Exchanges like Binance and Coinbase.

  2. 'Manually' wrapping it yourself

The first method is recommended for people who do not want to jump through technical hoops to own WBTC. Exchanges like Coinbase and Binance would do the trick!

The second method would be quite intimidating for someone new to crypto, so I wouldn't recommend it if I were you. They work somehow like DeFi Protocols, but they are technically not.

But if you are interested, you can check out https://wbtc.cafe/.

In conclusion, wrapping a cryptocurrency is a way of 'bridging' a crypto and allowing it to function on a different blockchain. This allows you to retain ownership while enjoying the advantages that a different blockchain might offer.

 

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changteck
changteck Verified Member

Avid Crypto investor with a penchant for trail running.


thecryptorunner
thecryptorunner

I discovered my interest and passion for the world of Blockchain & Cryptocurrency amidst the gloom & doom of COVID-19 in 2020, and decided to upskill to stay relevant and most importantly, employable. As an avid runner, I am a proud finisher of more than 10 marathons and ultra-marathons, including a 100km road race. As a cancer survivor, I kicked cancer's ass once and am on the way to my second victory!

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