Wrapped Bitcoin (WBTC) is a cryptocurrency token that is pegged to the value of Bitcoin at a 1:1 ratio moreWrapped Bitcoin (WBTC) is a cryptocurrency token that is pegged to the value of Bitcoin at a 1:1 ratio. It is an Ethereum-based token that allows users to access the functionality and liquidity of Bitcoin in the Ethereum ecosystem. WBTC is created as an ERC-20 token, which means it can be traded on decentralized exchanges (DEXs) and used in smart contracts.
One of the primary benefits of WBTC is the ability to use Bitcoin in DeFi (Decentralized Finance) applications on the Ethereum blockchain. The integration of WBTC with DeFi protocols allows Bitcoin holders to earn interest or take out loans using their Bitcoin as collateral, providing more opportunities for liquidity than leaving their coins on an exchange.
Another advantage is that WBTC can be transacted faster and with lower fees than regular Bitcoin. Ethereum's transaction fees are generally lower than those of the Bitcoin network, which can make it more cost-effective to use WBTC for smaller transactions.
Moreover, WBTC is fully backed by real Bitcoins, held in custody by a network of voluntary custodians. This ensures that each WBTC token has a direct one-to-one relationship with Bitcoin, allowing users to fully redeem their WBTC for Bitcoin at any time.
In summary, WBTC enhances Bitcoin's usefulness by unlocking the potential of the Ethereum blockchain, providing more liquidity and accessibility to Bitcoin holders, enabling Bitcoin to be used in DeFi applications, and ensuring transparency and security through its custodial system. (AI generated summary)
De facto interoperability between Bitcoin and Ethereum
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