Ethereum Blockchain Welcomes Bitcoin-Backed Stablecoin to Ledger for Tokenized BTC with WBTC
Bitcoin is the oldest and original cryptocurrency of the industry, but it now has a significant role on the Ethereum blockchain as well. Though there are plenty of stablecoins attached to the United States Dollar, and there are other countries establishing them as well with their local currencies, Ethereum has something completely different. Now, Wrapped BTC (WBTC), a new token from BitGo, is the latest ERC-20 to be welcomed to the Ethereum Blockchain, as reported by The Block.
The website for WBTC says that the goal of the stablecoin is to offer “greater liquidity to the Ethereum ecosystem including decentralized exchanges and financial applications. CTO of BitGo, Benedict Chan, has commented that the use of Bitcoin in this capacity makes it more like traditional bank notes. Even though Bitcoin has had its share of volatility in its relationship with USD, it still remains the most liquid and stable of the assets in the industry today. It has also maintained the highest market cap for the last decade.
Some experts may be concerned that BitGo’s role in this launch is strange since WBTC is not actually a part of the custody business it runs. However, Chan assured,
“In the long term we have a vision in which digital assets drive the global economy… From a platform perspective, the platform we build can support stocks, bonds, and so on.”
Presently, as of Wednesday evening, CoinMarketCap states that there are 72.4214 WBTC on the Ethereum network, supported by 72.4216 BTC (about $250,000), which provides it with slightly more collateral than necessary. However, these liquid funds are locked on the bitcoin blockchain, reserved specifically for WBTC.
Presently, Ethereum users have the ability to request WBTC, but only from certified merchants, and only after passing the AML/KYC identification procedures. Atomic swaps are presently the technology employed to distribute such cross-chain crypto trades. In the whitepaper for the technology, merchants are defined as “the institution or party to which wrapped tokens will be minted to and burnt from.” At the moment, the WBTC team has eight merchants that fall under that definition, including:
- Set Protocol
- Kyber Network
There have been multiple exchanges in the crypto market to already acquire some of the WBTC inventory, and plan to support its overall supply as well, says a press release from WBTC. There will be several dApps that allow the consumer to immediately use WBTC, including dYdX, Compound, and bZx.
Vitalik Buterin, the creator of Ethereum, voiced his displeasure over the centralized system, but the press release assured,
“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.”
Representatives of the WBTC project added,
“Wallet providers and exchanges will now be able to reduce overheads with the ability to support multiple currencies while maintaining only the one Ethereum node.”