There are various crypto companies that operate on Ethereum and would like to see users get exposure to Bitcoin. Towards that end, a joint press release indicates the companies will introduce Wrapped Bitcoin on Ethereum.
As per the release, Wrapped Bitcoin (WBTC) is an ERC20 token with a 1:1 parity with Bitcoin. The project will go live in the first month of 2019. In particular, the aim is to bridge Bitcoin liquidity and the decentralised ecosystem on Ethereum. Further, this is in realisation that the huge community on Ethereum would like exposure to Bitcoin.
Wrapped Bitcoin on Ethereum to bridge Bitcoin and smart contract community
Also, the bridging of the two sides will facilitate optimum functioning of decentralised applications (dApps) on Ethereum network. Further, the release says: “WBTC will allow the Ethereum network to be leveraged to enable new applications and use cases for Bitcoin.”
Loi Luu, Co-founder and CEO of Kyber Network believes the new cryptocurrency will benefit the greater smart contract ecosystem. “Applications on Ethereum such as decentralized exchanges and financial protocols will all be able to use Bitcoin seamlessly, creating bitcoin trading pairs which have been impossible until now,” Luu said.
In particular, the presence of Wrapped Bitcoin on Ethereum will maintain the highest levels of transparency. Specifically, BitGo will be in charge of custodial needs of WBTC. “All WBTC issued will be fully backed and verifiable on-chain,” the release explains.
Further, the project will incorporate a dashboard whose primary function will be to take care of proof-of-reserve. Basically, the proof-of-reserve functionality will ascertain that every Bitcoin stored by BitGo corresponds to the total outstanding WBTC. Further, only merchants will give permission for minting of WBTC through the custodian.
Interestingly, the moment users redeem their Bitcoin, “WBTC in turn will be burned. All such actions are verifiable on both blockchains, something only available with cryptocurrency.”
In addition, users can purchase WBTC on any exchange that supports the new protocol. Also, the cryptocurrency will harbor no restrictions as to the incorporation of WBTC in projects.
Furthermore, the WBTC platform will belong to a community whose governance will be under a Decentralized Autonomous Organization (DAO).