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Author: Admin | 2025-04-28
Perspective, a wrapped Bitcoin token is safe. It will likely be in custody in safe platforms like Ethereum or Binance Smart Chain, and once converted into an ERC-20 or BEP-20 token, it will hold the security of the related network.One of the significant flaws in wrapped BTC tokens is the need to trust the custodian that holds the underlying asset. If the custodian unlocks and releases the real Bitcoin to someone else, token holders of the ERC-20 compatible wrapped BTC would be left with a worthless asset. The way Bitcoin is held determines the level of security provided. A centralized custodial bridge that holds Bitcoin is an organization that promises to mint ERC-20 tokens on Ethereum, for example. The centralized entity must be trusted that they will hold the BTC and not run away with it. Users must ensure these organizations are at least backed up by guarantees and insurances in case something goes wrong.A decentralized smart-contract-managed bridge would be the best choice in the decentralized world of crypto. No need to trust any third party, only trust the code of immutable time-stamped smart contracts.The security of wrapped BTC bridges (cross-chain connections) has represented a heated argument across the DeFi community for a long time in that custodians must be relied upon for keeping the real BTC locked. Are wrapped tokens a good investment?Wrapped tokens are increasingly regarded as a good investment in the cryptocurrency world, where decentralized finance will undoubtedly play a significant role. In just over one year, about $800 million worth of Bitcoin was converted into wBTC, which gives an idea of the current capitalization of the industry.According to Arcane Research, the amount of Bitcoin locked on the Ethereum blockchain has increased to 189,000 BTC in 2021. It is estimated that a record 1% of Bitcoin's circulating
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