Trading crypto-assets can be risky, especially if you’re not an expert. The volatility of bitcoin has made it difficult for traders to predict the price and trade accordingly. This is because bitcoin’s value fluctuates so much that it’s hard to know how much your investment will be worth when you want to cash out.
Wrapped Bitcoin solves this problem by pegging its value at one dollar per token, meaning that no matter what happens with bitcoin, WBTC always equals $1 USDT or BTC. This new cryptocurrency makes trading against USDT easier and less risky for those who want to trade crypto assets without going through the hassle of converting between currencies first.
How does Wrapped Bitcoin work?
WBTC is an ERC-20 token, which means that it runs on the Ethereum network. This makes it very easy to trade because many exchanges are linked with Ethereum’s blockchain. BTCRelay provides the functionality for WBTC users to verify transactions made by custodians without concerning themselves with bitcoin transaction verification procedures.
The creation of WBTC is a collaborative effort between Kyber Network, Republic Protocol, BitGo, and AirSwap. Each participant has pledged money to back the pegged currency’s value. A custodian will lock up an equal value of bitcoin into a 2-of-3 multi-signature address, where an independent security firm provides the third signature.
WBTC tokens are created each time bitcoin is deposited to the multi-signature address and destroyed each time it’s redeemed. The WBTC token allows them to be traded against bitcoin or US dollars in the same way Tether tokens are.
Wrapped Bitcoin will allow larger institutions to enter into cryptocurrency trading without having to concern themselves with the price fluctuations of one specific currency. This will make it easier for crypto investors to include WBTC tokens in their portfolios, leading to more money pouring into the market.
How to Buy WBTC Coins?
To buy WBTC coins, you’ll need to set up an Ethereum-compatible wallet first. Next, transfer some ETH to your wallet and convert it to WBTC through one of the exchanges that currently support this new cryptocurrency like Kyber, Airswap, and OasisDEX. Then, withdraw the WBTC to your Ethereum address whenever you need to trade with it.
Wrapped Bitcoin is a great way to trade crypto assets without having to worry about BTC volatility. The ability to use bitcoin without actually touching it will make trading possible for even more people who were otherwise intimidated by the process.
With Wrapped Bitcoin, large institutions can enter the cryptocurrency market without concern for price fluctuations in one specific currency. WBTC has the potential to increase the market cap drastically and could lead cryptocurrency trading into the mainstream.
History of Wrapped Bitcoin (WBTC)
The idea for WBTC initially came from Kyber Network’s CEO, Loi Luu, which the company proposed in the paper “Enhancing Liquidity of Decentralized Exchanges via On-Chain Trading Pairs.” Wrapped Bitcoin was co-founded by BitGo’s CEO, Mike Belshe, along with Kyber Network’s CEO, Loi Luu. Kyber Network’s Binance-backed reserve will issue pegged WBTC tokens to anyone who provides their Ethereum address, but first, this account will need to be KYC/AML verified. The user has to wait for approval to become a WBTC issuer. Once approved by Kyber Network’s s compliance department, this user can then issue WBTC to anyone who holds a compatible wallet.
The current roadmap of Wrapped Bitcoin has been established to ultimately build a decentralized ecosystem where multiple projects can come together and help make the project better. Wrapped Bitcoin is just the first step toward developing a more robust decentralized cryptocurrency.
The future of Wrapped Bitcoin (WBTC) and other pegged cryptocurrencies is interesting. The idea of a pegged cryptocurrency will become even more prevalent in the future as more people are exposed to the benefits of digital assets. WBTC will allow trading pairs to be swapped without worrying about BTC price fluctuations, which is a great incentive for large institutions.
Wrapped Bitcoin (WBTC) FAQs
Can I store Wrapped Bitcoin (WBTC) tokens on a Ledger Nano S?
Yes, you can store WBTC tokens on a Ledger Nano S hardware wallet.
Is wrapped bitcoin the same as bitcoin?
Wrapped bitcoin is not the same as bitcoin. Wrapped bitcoin is a token that can be traded against BTC or USDT on exchanges. You can’t spend it directly with your wallet’s private key.
Is wrapped bitcoin a crypto kittie?
No, WBTC is not a Crypto Kittie. Wrapped Bitcoin (WBTC) is an ERC-20 token developed on the Ethereum blockchain with smart contracts technology.
It’s a pegged cryptocurrency. An asset whose value is 100% backed by bitcoin can be traded on exchanges for BTC or USDT.
How safe is wrapped bitcoin?
WBTC involves KYC and AML verification. Exchange participants have to be verified before they can issue WBTC tokens.
What is the current price of wrapped bitcoin?
The current price of 1 WBTC token is always exactly one dollar worth of BTC.
Is wrapped bitcoin a stable coin?
No, Wrapped Bitcoin (WBTC) is not a stable coin. It’s more like USDT, which lets you trade crypto assets against.
How many tokens are issued for each bitcoin?
For each wrapped bitcoin (WBTC) issued, there is always one underlying BTC.
What can I do with wrapped bitcoin?
You can use WBTC to trade against USDT or BTC on exchanges. You can’t spend it directly with your WBTC token private key. To store, send or receive, you will need to use a cryptocurrency wallet that supports the Ethereum ERC20 standard.
Is wrapped bitcoin all mined?
No, not all WBTC tokens are mined. Some are minted after verification by exchanges participating in the program.
What does wrapped bitcoin aim to solve?
Wrapped Bitcoin (WBTC) aims to solve the problem and ease trading for traders who desire an asset whose value is always exactly one dollar worth of BTC without going through the hassles of using exchanges.