What is WBTC?
In the recent days President Donald Trump bought 47 million USD worth of WBTC… but what is WBTC? WBTC stands for “Wrapped Bitcoin, a tokenised version of Bitcoin (BTC) that is in existence on the Ethereum blockchain. Every 1 WBTC is backed equally by 1 BTC stored in reserves. This bridges Bitcoin and Ethereum, allowing Bitcoin to interact with Ethereum’s ecosystem, including decentralised finance (DeFi) protocols, smart contracts, dApps ect…
Key Differences: WBTC vs BTC
- Bitcoin is on it’s own Blockchain while WBTC operates on Ethereum
- Bitcoin is a store of value and digital currency while WBTC is DeFi compatible and it’s liquidity is in Ether
- Bitcoin is fully decentralised and WBTC is semi-centralised
- Bitcoin’s use case is peer-to-peer payments, WBTC is used for DeFi dApps
- Bitcoin is used exclusively on the Bitcoin network while WBTC interacts with smart contracts.
Comparison at a Glance
- BTC is best to hodl long term, it’s censorship-resistant and fully decentralised.
- WBTC is used by people who wants to leverage their Bitcoin holdings in Ethereum-based dApps (DeFi Applications)
Key Trade-Off
WBTC sacrifices Bitcoin’s decentralisation and security.
