Review on Wrapped Bitcoin by Olugbenga Ajayi
Wrapped Bitcoin is a new project
Wrapped Bitcoin which is known as WBTC is an erc-20 token that has a one to one value with Bitcoin. As a result of the many innovation that has occurred to blockchain leading to the birth of Dapps, Defi, smart contract and many more which are not naturally applicable to Bitcoin, it is necessary to provide a way to make these usable with Bitcoin. This is the problem that the introduction of wrapped Bitcoin has solved.
Hence WBTC was created to bring in the the value and liquidity of Bitcoin into ethereum network which is less liquid. So with Wrapped Bitcoin being an erc-20, it is possible to make them usable and also considering the fact that it is faster than Bitcoin.
The project was launched in 2019 under the collaboration ofbig names in Defi like Bitgo, MakerDao. Today, the project is controlled by Dao.
As a result of the nature of wrapped Bitcoin, it is DAO that determine who will become its merchant and custodian. It is the merchant that will trigger the process of minting and burning WBTC token which is done by performing verification. When a WBTC is burned, BTC is returned to the user and when new WBTC is mined, BTC is taken from the user and stored by the custodian.
Pros
- The token can be used as collateral for borrowing and lending assets
- It makes the liquidity inherent to Bitcoin usable in ethereum network
- Defi, Dapps and smart contracts can now be applicable with Bitcoin
- It makes transfer of Bitcoin faster
- The project is governed by Giants in crypto world and Defi
Cons
- The code of Wrapped Bitcoin is not open source and cannot be verified on the GitHub. This is a minus for the project
- It is yet a new project so tommorow is still unknown
