scalability – What’s Wrapped Bitcoin WBTC?
Disclaimer: I labored at BitGo when WBTC was kicked off, however I did not work on the WBTC venture.
Wrapped Bitcoin (WBTC) is an ERC20 token totally backed by bitcoins held in BitGo’s custody. BitGo mints new WBTC when bitcoins are deposited into custody and WBTC is burned when bitcoins are withdrawn from custody. WBTC is a method to get an IOU for laborious cash into the ETH ecosystem.
As a “scaling answer”, it matches someplace between a sidechain and funds between two consumer accounts on a custodial service:
- There is no such thing as a “BTC on ETH”, all bitcoins are held by BitGo (or different custodian if one other will get added). WBTC is a promissory be aware for the belongings held by BitGo.
- Funds utilizing WBTC don’t work together with the Bitcoin blockchain, they occur on the ETH community
- WBTC might be freely despatched and obtained on ETH
- The WBTC token can’t be trustlessly redeemed for bitcoin, coming into and exiting WBTC requires actions by BitGo
As ETH continues to be determining its financial coverage, the ETH ecosystem lacks a tough cash. WBTC is regularly used to symbolize Bitcoin’s worth within the ETH ecosystem. Beneath the idea that WBTC is a devoted illustration of Bitcoin balances and since WBTC funds don’t devour Bitcoin on-chain assets, one may contemplate them a scaling method. Representing WBTC as “the scaling answer” for Bitcoin is a foolish misrepresentation.