Wrapped Bitcoin is an ERC-20 token on the Ethereum blockchain that represents Bitcoin.
- What is Wrapped Bitcoin?
Wrapped Bitcoin is an ERC-20 token on the Ethereum blockchain that represents Bitcoin. Each WBTC is backed 1:1 with Bitcoin. Wrapped Bitcoin allows for Bitcoin transfers to be conducted quicker on the Ethereum blockchain and opens up the possibility for BTC to be used in the Ethereum ecosystem.
Bitcoin is held in custody by the centralized custodian, BitGo. Bitcoin can be converted to Wrapped Bitcoin and vice versa easily.
- How was Wrapped Bitcoin Founded?
WBTC was launched in January 2019. BitGo, Kyber Network and Ren collaborated to find a way for users to bring more liquidity into the Ethereum ecosystem and that’s how Wrapped Bitcoin was created.
- How to convert Bitcoin to Wrapped Bitcoin?
To convert BTC to WBTC, a user may visit any of the platforms that is labeled “Merchant” in the WBTC partners page.
The user is required to verify his identity through a Know Your Customer (KYC) procedure.
After that, the user is required to transfer his BTC to the merchant’s BTC wallet.
Once the merchant receives the BTC, the merchant will then notify the custodian, BitGo, the amount of WBTC to be minted.
After obtaining 6 confirmations of the BTC transaction, the custodian will then produce an equivalent amount of WBTC.
Finally, the WBTC will be sent to the user’s Ethereum wallet.
- How to convert Wrapped Bitcoin to Bitcoin?
User initiates request to redeem BTC with WTBC.
The merchant will create a burn transaction for the amount of WBTC to be redeemed.
After 25 Ethereum block confirmations, the custodian will release an equivalent amount of BTC to the merchant’s Bitcoin address.
Custodian makes an Ethereum transaction marking the burn request as completed.
The user undergoes KYC procedure to redeem BTC.
After that is done, the merchant will send BTC to the user’s BTC wallet address.