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Author: Admin | 2025-04-28
Wrapped Bitcoin is an ERC-20 token directly backed by Bitcoin. ERC-20 tokens are created and used on the Ethereum blockchain. Since Wrapped Bitcoin is directly backed by Bitcoin, its price mirrors that of Bitcoin. Hence, 1 Wrapped Bitcoin is equal to 1 Bitcoin. Wrapped Bitcoins serve to bridge the ERC-20 trading gap between centralized and decentralized exchanges. Before the creation of wrapped bitcoins, most trading in centralized exchanges was done with Bitcoin and not Ether, while many decentralized exchanges only offered trades in Ether and not Bitcoin. However, this changed with the launch of Wrapped Bitcoin (WBTC). Through WBTC, DeFi traders can buy and trade a Bitcoin equivalent on decentralized exchanges that solely support ERC-20 tokens.History of Wrapped BitcoinBitGO Inc., Kyber Network, and Ren (formerly known as Republic Protocol) created and launched Wrapped Bitcoin. BitGO is a digital asset trust and security company. Kyber Network is a decentralized liquidity protocol that allows users to exchange tokens directly and securely. Ren is a blockchain protocol that enables users to interact between different blockchains.The first step in launching the Wrapped Bitcoin token was the release of its whitepaper on January 24, 2019. The whitepaper outlined its purpose and functionality in detail.The Wrapped Bitcoin token was launched on January 31, 2019. At the time of the token launch, only eight merchants could facilitate the conversion of Bitcoin to Wrapped tokens and vice versa. However, as the token grew in popularity, the number of merchants facilitating the conversion of Bitcoin to Wrapped Bitcoin increased.Key PlayersCustodianThe custodian is the institution or party that holds Bitcoin, the underlying asset backing the Wrapped Bitcoin tokens. BitGo is the custodian of the Wrapped Bitcoin token. It holds Bitcoin in its reserves, ensuring that the Wrapped Bitcoin token maintains a 1:1 ratio price peg with Bitcoin. The custodian is also responsible for minting the Wrapped Bitcoin token. MerchantThe merchant is the institution or party to which the Wrapped Bitcoin token will be minted and burnt. The merchant directly interacts with the custodian, distributing the Wrapped Bitcoin token minted from the custodian to the users. In the early days of the Wrapped Bitcoin token launch, Kyber Network and Ren were the main merchants. However, the number of merchants interacting with the custodian (BitGO) and distributing the Wrapped Bitcoin tokens has increased.UsersThese are the holders of the Wrapped Bitcoin token. They can trade or transact with the token on the Ethereum network.DAO MembersA DAO, or decentralized autonomous organization, is a decentralized entity comprising members who can vote or participate in the decision-making process of a blockchain protocol or network. The Wrapped Bitcoin protocol is controlled by a DAO comprising 17 members. Each member of the Wrapped Bitcoin DAO holds a key
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