The evolution of cryptocurrencies has yet again given rise to a masterpiece set to revolutionize the burgeoning sector. In other words, Wrapped Bitcoin Tokens (WBTC) is the latest cryptocurrency taking Bitcoin-Ethereum integration to another level.
WBTC Facilitates Bitcoin-Ethereum Integration
WBTC is the brainchild of Kyber, Republic Protocol, and BitGo. The team’s main objective is to enable the compatibility of Bitcoin (BTC) with the Ethereum (ETH) blockchain. Initial launch partners include the likes of Hydrogen, Set Protocol, Dharma, among others.
Slated for release early next year, Wrapped Bitcoin Token is to integrate Bitcoin on the Ethereum blockchain. Backed by the value of Bitcoin, the new token will trade across all networks. While Bitcoin and Ethereum have operated as two different networks, WBTC will seek to unite the two.
“What this means is that for each WBTC minted into existence, there is an equivalent amount of Bitcoin held in custody in a 1:1 ratio — it is fully backed,” the whitepaper reads.
Wrapped Bitcoin Tokens will expand Bitcoin usage to enable more use cases. Trading of Bitcoin on a decentralized exchange will be possible as a result. It is still unclear the kind of impact the new token will have on Bitcoin. The cryptocurrency community is currently relying on its whitepaper to validate its prospects ahead of its official launch next year.
Amidst the wave of uncertainty, details on what WBTC will be all about are slowly emerging. For starters, the new cryptocurrency will enable the integration of smart contracts and atomic swaps on Bitcoin. The tokens will also standardize WBTC on the ERC20 format to enable the creation of smart contracts on BTC.
Addressing BTC Scalability Issue
Likewise, WBTC plans to increase Bitcoin transaction speeds to solve the scalability issue that has clobbered Bitcoin. Initial indication is that new tokens will leverage the Lightning Network to speed up Bitcoin transactions.
However, the biggest development has to deal with the way WBTC plans to wrap other tokens. Consequently, it should be much easier to write smart contracts that can integrate BTC transfers.
By wrapping the tokens, people should be able to trade them on the Ethereum blockchain. The wrapping up aspect will make it easy to represent other cryptocurrencies for integration on Ethereum blockchain.
Wrapped Bitcoin Tokens also plans to bring about liquidity in the Ethereum ecosystem. Therefore, it should give rise to decentralized exchanges as well as financial applications. Currently, most of the trading volumes take place on centralized exchanges, which is something that WBTC intends to change.
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