Review on Wrapped Bitcoin by francis fernandez
Wrapped Bitcoin: The Equal Exchange Parity Equivalence Between Bitcoin and Ethereum
Wrapped Bitcoin is a digital asset that achieves equal exchange parity between Bitcoin and its ERC-20 token. Due to this, the equality of value between BTC and WBTC (ERC-20 token) of 1: 1 is achieved, that is, 1 BTC = 1 WBTC (ERC-20 token).
Creation of the WBTC DAO token:
The generation of WBTC tokens consists of minting the cryptocurrency. Two main actors are involved in this process: custodian and merchant. The first is in charge of coining and the second starts the procedure.
• The multi-sig smart contract applied to the WBTC token is protected by means of a key by official entities of WBTC DAO; who are responsible for adding or disaggregating custodians and merchants through an open consensus and multiple signing of said contract.
• Traders are responsible for managing the minting and burning procedure of the WBTC token. They are leading participants in the WBTC community.
• There are participants called custodians who are responsible for the validation and assurance of the WBTC tokens issued through the use of proof of reserves in chains. These members guarantee the official security for the cryptocurrency.
Token redemption:
The process of exchanging BTC token for WBTC token or token burning; It is called fiery and consists of subtracting the WBTC tokens from the merchant's balance and reducing its supply in the same proportion.
Token Utilities:
• This token injects liquidity to the open source exchange houses and the platforms of the Ethereum network. This makes it possible to decentralize the flow of Bitcoin money and move it towards token exchanges.
• It allows to include Bitcoin in the technology of smart contracts, through the ERC-20 token; which makes possible the execution of BTC transfers.
• Consolidate the platforms of wallets, exchanges and payment Dapp under a single Ethereum node; allowing to reduce maintenance costs of servers in networks and to unify transactions.
Pros
- It allows to simplify transactions and unify them by means of two equivalent tokens.
- It allows reducing costs for the use of only one node and not for the management and maintenance of a network of connected servers
- Allows you to transfer Bitcoin through the incorporation of smart contracts and the ERC-20 token.
- Simplifies asset exchange tasks due to the equality between WBTC token and Ethereum.
Cons
- There are no disadvantages in its use
