- What is The Wrapped Bitcoin (WBTC) Platform and how does it work?
- Advantages of the Wrapped Bitcoin exchange.
- Wrapped Bitcoin ’s past, present and future price positions.
The Wrapped Bitcoin Exchange
Wrapped Bitcoin is the tokenized version of Bitcoin (BTC) that runs on the Ethereum blockchain, in other words it is an ERC-20 token. Through a WBTC partner, one Bitcoin (BTC) can be converted into one WBTC (and vice-versa).
Bitcoin is the oldest and largest cryptocurrency on the market, the Bitcoin can boast a very large liquidity pool of several billion USD and a very large user base as well. However, the Bitcoin blockchain is relatively basic regarding functionality in accordance with the modern standards.
The “wrapping” of Bitcoin into the Ethereum blockchain has enabled full-integration of a Bitcoin-like asset into the advanced Ethereum environment of financial decentralised applications, bringing the immense liquidity pool of Bitcoin with it.
Wrapped Bitcoin also makes the job of the exchanges, payment services and wallets much easier that work with Ethereum, this is because the exchanges do not need to run two separate nodes of BTC and ETH networks, instead they can support WBTC operations just through the use of Ethereum node.
The current market capitalization of Wrapped Bitcoin (WBTC) is more than $5,244 billion. There is a maximum supply of 237,832 WBTC coins, 100% of which are currently in circulation.
There are different types of WBTC models, these include:
- Centralised, this means users rely on a firm to maintain the BTC assets value - assets are provided to a centralised monetary intermediary. Thereafter, they lock up the crypto in a smart contract and issue the corresponding ERC-20 token.
- Trustless, more advanced way to lock-up an asset via a decentralised system. Using this method, the centralised custodial responsibilities are transferred over to smart contracts. Your BTC remains locked in a network contract that the platform can’t adjust without approval from you. This strategy provides users with a trustless and autonomous system.
- Synthetic asset, here users are able to lock their BTC into a smart contract and receive a synthetic asset in return with equal value.
Advantages of the Wrapped Bitcoin exchange
- One of the main advantages of Wrapped Bitcoin (WBTC) is its integration into the Ethereum world, its access to Ethereum wallets, smart contacts and dapps.
- Wrapped Bitcoin (WBTC) brings greater liquidity to the market. Wrapped Bitcoin (WBTC) integrates BTC liquidity into the flexibility of the Ethereum ecosystem. Thus, WTBC closes the liquidity loop between many DeFi and CeFi products.
- Scalability, transactions with Wrapped Bitcoin (WBTC) are less costly and faster and also offers more storage and transaction options.
- Wrapped Bitcoin (WBTC) gives its users more functionalities than just the regular Bitcoin (BTC). For example, WBTC running on the Ethereum blockchain gives WBTC users access to smart contracts.
- DeFi BTC, it could be argued that the expansion of Decentralised Finance (DeFi) was the basis for the creation of Wrapped Bitcoin (WBTC).
- Wrapped Bitcoin (WBTC) can be staked, staking is one of the most popular functionalities of DeFi, users who convert their BTC into WBTC can take advantage of next-gen protocols, for example, most require a user to lock their cryptocurrency into a smart contract for an agreed time in exchange for rewards.
- Yield farming protocols like Compound allow users to earn a passive income through lending out Wrapped Bitcoin (WBTC) to other users in the network via these farming pools. Yield farming has become increasingly popular in DeFi.
The advantages mentioned above have aided the growth of Wrapped Bitcoin (WBTC), they have also helped construct a new sector within the crypto industry. Nowadays, more investors than ever wish to utilise WTBC services.
Past, present and future prices of The Wrapped Bitcoin network (WBTC)
The value of WBTC took awhile to take off after it was launched, its price began to climb in 2021, reaching its peak value $65,546.47 in late November 2021. Since its maximum peak, the value of WBTC has been falling consistently. The volatility in its price has staggered in both the upward and downward directions, the crypto has seen much volatility, which is a normal trend for the volatile nature of the crypto market.
Over the past few months, the global markets have been facing strong investor risk-off sentiment in the wake of the geopolitical tensions, Covid-19 lockdowns in China and supply chain issues. The cryptocurrency market has followed the trends of the greater market during these times, therefore the price of most cryptocurrencies have been falling, WBTC does fall under this category.
According to some analysts, the future price of The Wrapped Bitcoin (WBTC) network could reach up to $75,239.85 by 2024 and could see a price of more than $81,435.88 by 2026. However, it is important to remember that this future price prediction is based solely on data and does not take into account factors such as investor sentiment and the ever changing market conditions, both of which make it difficult to make accurate future price predictions.
WBTC Price Chart
Sources: finance.yahoo.com, coinmarketcap.com, securities.io, help.coinbase.com, cryptonewsz.com