Bitcoin

Bitcoin and Wrapped Bitcoin – Whats the Difference?

As the first cryptocurrency, bitcoin offers users some incredible advantages. it is completely decentralized, transparent and open source. however, its blockchain was established before the advent of smart contract technology. this has made it impossible for bitcoin users to directly enjoy the latest decentralized applications or dapps.

wrapped bitcoin (wbtc) offers a solution to this problem. it is btc ‘wrapped’ in ethereum, which makes it compatible with their smart contracts.

Reading: Wrapped bitcoin vs bitcoin

In other words, wbtc is an erc-20 standard ethereum smart contract token that tracks the price of bitcoin, meaning it can be bought with bitcoin, at a 1:1 ratio.

key takeaways

  • bitcoin is a cryptocurrency native to the bitcoin blockchain. Wrapped Bitcoin is an Ethereum-based token that has its value tied directly to that of Bitcoin. /li>
  • wrapped bitcoin also offers a host of uses within the defi space, including yield farming

what is the difference between wrapped bitcoin and bitcoin?

Blockchain technology has come a long way since the launch of bitcoin in 2009. The introduction of smart contracts, proof-of-stake (POS) consensus mechanisms, and other innovations have opened up new possibilities for the blockchain space. But bitcoin’s lack of interoperability has left btc holders in the dark when it comes to the latest defi and gamefi apps.

wrapped bitcoin was created to rectify this situation by offering a way for bitcoin holders to use their cryptocurrency on the ethereum blockchain, which hosts more than 3,000 dapps. therefore, wrapped bitcoin aims to offer the value of bitcoin along with the flexibility of an ethereum-based token.

bitcoins

See also: Bitcoin Code Review 2022 – Is it a Scam or Safe to Use?

bitcoin is the world’s largest cryptocurrency by market capitalization and is native to the bitcoin blockchain. Since its launch in 2009, Bitcoin’s value has fluctuated, but it has always been the most popular cryptocurrency, even finding acceptance by major companies like Starbucks and PayPal. however, since the bitcoin blockchain lacks smart contract integration, it cannot be easily used in dapps.

wrapped bitcoin

wrapped bitcoin, on the other hand, is a cryptocurrency that is designed for the ethereum blockchain from the ground up. Wrapped Bitcoin gives users the ability to exchange their BTC for the ERC-20 WBTC token standard, which tracks the price of BTC but gains the advantages of the Ethereum blockchain.

This allows btc holders to easily take advantage of the latest defi opportunities. Originally developed by BitGo, Ren, and Kyber, Wrapped Bitcoin is now maintained by WBTC DAO (Decentralized Autonomous Organization), an organization that includes more than 30 members. however, this also means that wrapped bitcoin has centralized elements as it is managed by one organization, albeit a dao, while bitcoin is a decentralized cryptocurrency.

how does wrapped bitcoin work?

bitcoin holders can trade btc for wbtc at a 1:1 ratio on the crypto.com exchange. the wrapped bitcoin mechanism holds the btc in exchange for the issued wbtc. when a user wants to exchange their wrapped bitcoin to bitcoin, the wbtc is burned to keep the correspondence between the two.

what can you do with wrapped bitcoin?

Bitcoin is a cryptocurrency, which means its uses are limited to storing value and serving as a medium of exchange. wrapped bitcoin offers increased functionality.

See also: Here&x27s Why I Still Won&x27t Buy Bitcoin, and You Shouldn&x27t, Either | The Motley Fool

As an erc-20 token, wrapped bitcoin has a wide variety of use cases, including:

  • provides liquidity to dexs: with wbtc, bitcoin holders have the opportunity to easily provide liquidity to decentralized exchanges (dexs) and reap the rewards of doing so. examples of popular dexs accessible directly from the crypto.com defi wallet include uniswap and vvs cryptographic. wbtc allows holders to invest in liquidity pools and earn returns. tectonic is an example of a lending platform natively integrated with the cronos ecosystem of cryptocurrencies offering loans in your jurisdiction

conclusion

If you are a bitcoin believer but would also like to take advantage of the latest dapp and defi opportunities, wbtc is a good solution. Since its value is pegged to bitcoin, you can track the price of btc while enjoying the smart contract functionality of wbtc.

On the crypto.com exchange, you can convert your btc to wbtc in a matter of minutes. visit the exchange for more information.

due diligence and do your own research

All examples listed in this article are for informational purposes only. You should not construe any such information or other material as legal, tax, investment, financial or other advice. nothing contained herein shall constitute a solicitation, recommendation, endorsement or offer by crypto.com to invest, buy or sell coins, tokens or other crypto assets. proceeds from the purchase and sale of crypto assets may be subject to tax, including capital gains tax, in your jurisdiction.

Past performance does not guarantee or predict future performance. the value of crypto assets may rise or fall, and you could lose all or a substantial amount of your purchase price. When evaluating a crypto asset, it is essential that you do your research and use due diligence to make the best judgment possible, as any purchase will be solely your responsibility.

See also: Quantum Computers Could Crack Bitcoin. Here&039s What It Would Take

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