What is Wrapped Bitcoin and Why it is So Important?
For a variety of reasons, the notion of wBTC continues to gain traction in the market. First and foremost, no one wants to exchange their BTC, especially now that it is at all-time highs. Wrapped Bitcoin allows long-term investors to receive passive income without giving up control of their valuable digital assets. As a result, additional wBTC is expected to enter the market in the following weeks. #TWN
WBTC is a brand-new technology that incorporates Bitcoin into the Ethereum network with ease. Traders, institutions, and Dapps can connect to the Ethereum network while maintaining their Bitcoin exposure using this one-of-a-kind financial instrument. The concept is to merge Bitcoin's market value with Ethereum's programmability.
Each wBTC is an ERC-20 token that represents Bitcoin exactly (BTC). Notably, any Bitcoin can be converted to wBTC utilizing one of the numerous public networks available today. If you like, you can always convert your wBTC to ordinary BTC. Because of this versatility, users can quickly swap between wBTC and BTC to suit their investment strategy.
Benefits of Wrapped Tokens
After learning about it, you might wonder why you'd want to convert your BTC to wBTC. Fortunately, there are numerous reasons why a Bitcoin investor might want to wrap their assets. Its main goal is to integrate with the Ethereum network. Ethereum has the broadest ecosystem of any cryptocurrency. This massive network includes exclusive wallets, Dapps, DEXs, games, and smart contracts. Wrapped Bitcoin users can also have access to DeFi lending and borrowing networks without ever having to give up or transfer their cryptocurrency. This last argument is the one that has caused such a stir in the market recently.
Greater liquidity is another important benefit that wBTC delivers to the market. Ethereum's ecosystem is large and diversified. As a result of this dispersion of funds, DEXs (decentralized exchanges) and other platforms may lack the liquidity they require to operate effectively. Because users can't trade their tokens fast or for the quantity they want, an exchange with low liquidity becomes less effective. wBTC combines the flexibility of Ethereum's ecosystem with the liquidity of Bitcoin. In this way, wBTC bridges the gap between numerous CeFi and DeFi solutions in terms of liquidity.
How to store Wrapped Bitcoin?
Everyone should use ZenGo, a multi-chain cryptocurrency wallet. With incredible simplicity and unbreakable security, you can buy, trade, and store 70+ digital assets, including Wrapped Bitcoin (wBTC). ZenGo is known for its legendary in-app customer service, which is available 24 hours a day, seven days a week, and for its keyless MPC technology, which offers you complete control over your crypto while ensuring that it is always recoverable.ZenGo is available in Australia, Canada, Europe, the United Kingdom, and the United States (Purchases are restricted in Hawaii, New York, Rhode Island, US Virgin Islands).
Is Wrapped Bitcoin safe?
The concept of wBTC is rather safe in terms of technology. However, there are several concerns to be aware of when converting your BTC to wBTC. The trust-based structures of early wBTC systems are one of the key sources of worry. There's always the possibility that the platform will unlock the actual BTC and leave token holders with phoneywBTC in this case.
Given the general utility and low cost of wrapping BTC, it's no wonder that developers are working hard to expand on the concept. There's already a trend to incorporate wrapped Bitcoins into more advanced DeFi designs.
Users can doubly stake their tokens on complex DeFi networks. Consider staking your wBTC and then immediately re-staking your winnings in a different pool. There are other techniques in which developers would rather pay staking incentives in crypto than DeFi tokens. In this case, you stake wBTC and receive ETH as a straight payout.