A Bitcoin-Backed Stablecoin Has Launched on the Ethereum Blockchain

- Advertisement -

A new token backed one-to-one with bitcoin is now live on the ethereum blockchain.

“Wrapped BTC” (WBTC) officially launched its ERC-20 token Wednesday evening. The project was first unveiled in October as a joint initiative between decentralized exchange startups Kyber Network and Republic Protocol, as well as cryptocurrency custody company BitGo.

As stated on the project’s website, the aim of WBTC is to bring “greater liquidity to the ethereum ecosystem including decentralized exchanges and financial applications.”

At the time, BitGo CTO Benedict Chan described WBTC as possessing both “the stability of bitcoin and the flexibility of ethereum,” likening the new crypto asset to traditional bank notes (the kind that were once redeemable for gold). While volatile compared to the U.S. dollar, bitcoin is the most liquid and stable of cryptocurrencies, he noted. While volatile compared to the U.S. dollar, bitcoin is the most liquid and stable of cryptocurrencies with the highest market capitalization, he noted.

Now listed on cryptocurrency market data site CoinMarketCap, as of early Wednesday evening there was a reported 72.4214 WBTC on the ethereum network, slightly over-collateralized with 72.4216 BTC (roughly $250,000) locked in custody on the bitcoin blockchain.

Leveraging a technology known as “atomic swaps” to facilitate cross-chain cryptocurrency trades, users on ethereum can request WBTC from certified “merchants” after undergoing necessary anti-money-laundering and know-your-customer (AML/KYC) identification procedures.

- Advertisement -

Playing a key role in the exchange and liquidation of new WBTC tokens, merchants are defined in the technology’s white paper as “the institution or party to which wrapped tokens will be minted to and burnt from.”

According to the WBTC team, there are presently eight merchants to facilitate conversion between WBTC and BTC. These include: AirSwap, Dharma, ETHfinex, GOPAX, Kyber Network, Prycto, Ren and Set Protocol.

A Bitcoin-Backed Stablecoin Has Launched on the Ethereum Blockchain

- Advertisement -

How users receive WBTC tokens. Image courtesy of Kyber Protocol.

Traded on exchanges

In addition, a number of cryptocurrency exchanges have already procured part of the initial WBTC inventory and will be able to support its live supply directly on their respective platforms, according to a WBTC press release.

As well, several financially-focussed decentralized applications on ethereum, including bZx, Compound and dYdX, will allow “immediate usage” of the new token.

As such, despite the concern expressed by the creator of ethereum, Vitalik Buterin, on Twitter over the centralized nature of this token swap system, the press release states:

“The fundamental design of WBTC and the continuing commitment of all member to openness will form the essential building blocks for a transparent process framework and governance structure … WBTC will remain a firmly community-led initiative.”

A $5 National Gold Bank Note issued by the First National Gold Bank of San Francisco, California, image via Wikimedia Commons.



Previous Articles:

- Advertisement -

Latest News

Amber International Raises $25.5M to Grow $100M Crypto Reserve Fund

Amber International Holding raised $25.5 million in a private placement to expand its $100...

Traders Flock to Hyperliquid Apps Amid Hopes for Airdrop Rewards

Investors are moving millions into projects on the Hyperliquid blockchain in hopes of future...

Bank of Russia Rules Out Cryptocurrency Investments, Cites Risks

The Bank of Russia will not invest in cryptocurrencies.The central bank sees cryptocurrencies as...

Saylor Sets Sights on Making MicroStrategy a Leading Bitcoin Bank

MicroStrategy aims to become a major Bitcoin-backed bank, following early predictions from Hal Finney.Founder...

Senator Lummis Unveils Crypto Tax Bill With $300 Exemption Limit

Senator Cynthia Lummis introduced a bill to give U.S. crypto users new tax benefits.The...

Must Read

Top 8 Best Anonymous Web Hosting Companies That Accept Crypto

Nowadays, there is plenty of information about people online, and malicious people use them to carry out inappropriate activities. If you want to keep...