What is Wrapped Bitcoin (WBTC)?

Learn about wrapped Bitcoin (WBTC) and how it’s useful for you.

WBTC on Tokpie

Wrapped Bitcoin is the most liquid ERC20 token pledge with Bitcoin. One WBTC is equal to one BTC. Wrapped Bitcoin (WBTC) is very useful for decentralized exchanges and dApps that operate on the Ethereum blockchain. Being completely transparent, WBTC is a 100% community-led digital asset.

This article explains how WBTC works and what advantages it brings to traders, Ethereum-powered tools, and other cryptocurrency service providers.

Advantages of WBTC

WBTC gives greater liquidity to the Ethereum ecosystem including decentralized exchanges (DEXs) and financial applications. A great example is Uniswap that supports WBTC/ETH market pair. That pair attracts around $1 billion liquidity.
Nowadays, centralized exchanges generate most of the trading volume with Bitcoin. However, WBTC changes that, re-allocating Bitcoin’s liquidity to Ethereum blockchain and ERC-20 tokens.

WBTC standardizes Bitcoin (BTC) to the ERC20 format. It allows to create smart contracts for Bitcoin and integrate BTC transfers.

Therefore, instead of maintaining various nodes for different transaction types, exchanges, wallets, and Dapps only need to support an Ethereum node.

Benefits for Traders, Institutions, and Dapps

Traders, Institutions, and decentralized applications (Dapps) are the main counterparties that win by using WBTC.

Exchanges, wallets, payment services

Handling multiple cryptocurrencies across different nodes and transaction formats is a hard task for exchanges, wallets, and payment services. But, WBTC provides the benefits of Ethereum and Bitcoin nodes, making it easy to handle the wrapped cryptocurrency with only the Ethereum node.

Decentralized applications (Dapps)

In addition, decentralized applications can now leverage Bitcoin payments in smart contracts for lending protocols, funds, prediction markets, and token sales.

Traders

Also, Wrapped BTC (WBTC) allows users to experience increased liquidity and participation. The Ethereum network processes transactions faster and cheaper than the Bitcoin network. As a result, Bitcoin holders don’t have to wait anymore. Thanks to WBTC, moving Bitcoin between exchanges via the Ethereum blockchain is much cost-efficient.

You can buy and sell WBTC against many cryptocurrencies and stablecoins on the Tokpie exchange.

How does WBTC work?

To get WBTC, a user requests tokens from a merchant. After that, a merchant performs a swap. During a swap, a user provides the merchant with Bitcoin, while Merchant, in turn, transfers WBTC to the user.

How WBTC works
WBTC Mechanics

Minting is the process of creating new wrapped tokens (WBTC). A merchant initialized such minting. You can find proof of assets by clicking on these BTC wallets.

Burning is the process of redeeming BTC for WBTC tokens. Only a merchant can do this. The amount is deducted from the merchant’s WBTC balance (on-chain) and the supply of WBTC is then reduced.

Useful links

For any question or cooperation, you can contact Tokpie at https://t.me/tokpie