BitGo and Kyber Create BTC-backed Ethereum-Based Wrapped Bitcoin Tokens (WBTC)
A new token could soon be launched on the Ethereum (ETH) network. This information could not sound very exciting since there are many tokens being launched on Ethereum every single week. However, this token will be backed 1:1 by Bitcoin and will be launched in January.
In order to make this possible, the companies Kyber Network, Republic Protocol, and BitGo have been working together in order to develop this asset. According to some reports, the virtual currency would be embraced by several ethereum-based projects once it ’s released to the market.
The main intention is to increase the use case of bitcoin and act as a peer-to-peer payment tool. The new token will be known as WBTC or ‘wrapped bitcoin.’ It will facilitate the use of the most popular virtual currency for decentralized applications that run on ETH.
On the mater, Benedict Chan, CTO of BitGo, commented:
“It’s very similar in some ways to how people created banknotes that represented a pound of gold. A pound of gold was heavier and it took longer to trade. You could use a note which represented a pound of gold and it was well accepted.”
BitGo will be the company offering custodian services to WBCT. It will be holding a reserve of Bitcoins that will be backing all the minted WBTC tokens that are in circulation using the Ethereum network. Additionally, users will be able to know at all times that the reserves are real since it is possible to verify that information using the two blockchains.
There will be registered merchants that will be disseminating and redeeming WBTC tokens to users. Merchants on the Kyber Network and Republic Protocol will be completing transfers of WBTC for bitcoin and vice versa performing atomic swaps.
In the long run, the intention is to onboard new custodians and merchants that will be distributing these coins. At the same time, Loi Luu, CEO of Kyber Network said that when WBTC will be launched, there will be decentralized autonomous organization (DAO) in charge of overseeing how the project evolves. Luu explained that as there will be a DAO backing this project, there are many other companies supporting the initiative.
Although this sounds very positive for the future, the list of companies that will be part of the DAO is not specified. Luu has also explained that decentralized leadership will be an important feature of this project.