Review on Wrapped Bitcoin by Hakan Altan
About Wrapped BitcoinWrapped
Wrapped Bitcoin - Wrapped Bitcoin, WBTC, is a relatively new concept that has not yet proven itself, but can prove its worth by solving the liquidity problem of the DeFi ecosystem.
To summarize, the wrapped Bitcoin, WBTC, can be considered as a new technology that enables the circulation of BTCs on the Ethereum network.
How WBTC Tokens Work?
While the cryptocurrency market has been strengthening its existence for a very long time, one of the biggest problems in this process is that different networks work in complete disconnection from each other. In other words, communication between the Ethereum network and the Bitcoin network is not possible. The reason for this was the lack of blockchain bridges that would connect these networks.
WBTC can be considered as a new technology that has entered the market as a solution to this problem. The ability to place tokens on different blockchain networks, thus solving the liquidity problem for DeFi projects.
WBTC is an ERC-20 token powered by Bitcoin on a 1: 1 basis. So, imagine that for every BTC in the Bitcoin network, a WBTC token is also generated in the Ethereum network.
For a BTC in the Bitcoin network, when 1 WBTC is created in the Ethereum network, an intermediary system functions so that it can be seen and approved by everyone.
Pros
- Equivalent to bitcoin
- fast transfer
Cons
- No
