In the world of cryptocurrencies, Bitcoin is the model for all, which made several other coins like Wrapped Bitcoin named after it.
You must have heard about Bitcoin Cash, Bitcoin Diamond & Bitcoin Silver, Wrapped Bitcoin is a unique crypto coin with its own features.
In this post, we’ll learn about Wrapped BTC and see if it is good for investment.
What is Wrapped Bitcoin (WBTC)?
Wrapped Bitcoin is a fairly new innovation that effectively brings Bitcoin to the Ethereum blockchain. One of the main use cases for WBTC lies in decentralized finance.
The token trades by the symbol WBTC. This token is an ERC-20 token that is backed on a 1 ratio 1 basis with Bitcoin.
The token was first announced on October 26, 2018 and officially launched on January 31, 2019. It was founded by three organizations which are BitGo, Kyber Network & Ren.
How does WBTC work?
WBTC works in a way that you can be able to use DeFi application which can’t be achieved by Bitcoin. There isn’t much of a cryptocurrency bridge connecting Bitcoin and Ethereum. WBTC helps to solve this problem as well as delivering some much-needed liquidity to DeFi protocols.
When BTC is wrapped, the cryptocurrency is held in a reserve by the BitGo trust. This is made known via the amount of WBTC in circulation. This shows the proof that BTC, its underlying asset, is being securely held in custody.
WBTC’s Worth In Crypto Market
The price of WBTC today is $42.06320 with a trading volume of $238,695,432. The token is ranked 18th among thousands of crypto coins by CoinMarketCap.
WBTC has a live market capitalization of 811, 095, 665, 950. It has a circulating supply of 263, 783 WBTC.
The token can be purchased on top cryptocurrency exchanges like Binance, FTX, Huobi Global, and so on.
How is WBTC Different from other cryptocurrencies?
WBTC has its unique features that makes it different from other crypto assets. The fact that it bring BTC to the ETH blockchain makes it a choice for crypto investors. WBTC gives it holders freedom to explore other blockchains when compared with BTC.
Since it was launched in 2019, many DeFi protocols have allowed borrowers to use WBTC as collateral/loan. This can be then locked up into a smart contract, with crypto loans usually paid out using the DAI stablecoin on the Ethereum ecosystem.
Is it safe to invest in WBTC?
Investment in cryptocurrency is the most risky form of investments due to its volatility in price. If you must invest in crypto, then you can put what you can afford to lose and not your savings.
WBTC tokens are however secured by the parent blockchain they run on i.e. Ethereum. Ethereum on its own is protected by the Ethash proof-of-work function.
The fact that WBTC is backed by two of the most credible crypto today, i.e. Bitcoin and Ethereum, it is a good choice for investors. Despite this, you still need have more information about a token before investing in it.
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