We could soon see a new Ethereum-based token linked to Bitcoin (BTC). The new Wrapped Bitcoin (WBCT) will have ‘the power of Bitcoin with the flexibility of ERC20.’ The information was released in a blog post by Benedict Chan, CTO at BitGo a few days ago.
WBTC: An Ethereum-Based Bitcoin Token
According to the official press release, the new ERC20 will be backed by Bitcoin. It will have the stability of BTC and work on the expansive ecosystem built by Ethereum. Several decentralized applications (dApps) and projects will now have a Bitcoin-backed ERC20 token.
BitGo will be in charge of providing custody services for the new WBTC. Additionally, it ill be tokenizing it b minting WBTC together with the approval of different community members. This would allow users to use Bitcoin on decentralized exchanges, as collateral for stablecoins or as lending.
Some of the companies that are supporting this initiative are Kyber Network, Republic Protocol, MakerDAO, Dharma, Airswap, IDEX and many others.
The token will be tokenized and will be backed 1:1 with Bitcoin. In order to keep track of the number of BTCs stored, there will be a dashboard displaying addresses and balances. Interested users will have the possibility to verify on the blockchain the amount of BTC held.
During the last months, several stablecoins failed to provide users with transparency. It was not easy to properly inform users about the dollars held in bank accounts. However, as Bitcoin does not require a bank to function, the funds will be traceable at all times. This will bring trust to the digital currency, very important to enhance the cryptocurrency ecosystem.
The official press release reads as follows:
“For BitGo, WBTC is an opportunity to contribute technical leadership to the advancement of blockchain and tokenization platforms. We take a practical approach towards development: engineering and security efforts put into the creation of WBTC will be leveraged towards supporting future asset tokenization.”
In the past, BitGo worked with Royal Mint Gold (RMG) in order to tokenize gold. With this experience, BitGo will be tokenizing BTC and creating the new WBTC. The WBTC is expected to be launched at the beginning of the next year.
There are several USD-backed stablecoins in the market. Nevertheless, this is the first time that there is a Bitcoin-based ERC20 token. Clearly, this will play a transformational role in the crypto industry and how some dApps work.
Carlos is an international relations’ analyst specializing in cryptocurrencies and blockchain technology. Since 2017, Carlos has written extensively for UseTheBitcoin and other leading cryptocurrency sites; with over 2,000 articles published.
