What is Bitcoin Inventory? Who invented WBTC? Bitcoin is the first, largest and most recognized encryption asset. Since the birth of Bitcoin more than ten years ago, the technology behind the revolutionary "peer-to-peer electronic cash system" has remained basically unchanged. But Bitcoin is not the whole and final result of cryptocurrency. On the smart contract blockchain such as Ethereum, developers have created a thriving decentralized financial (DeFi) ecosystem. In order to use Bitcoin in Ethereum's DeFi ecosystem, it is necessary to create an ERC-20 token to represent it. This is Wrapped Bitcoin (WBTC), which aims to combine the best of both worlds by bringing the value and liquidity (currency) of Bitcoin into a dynamic and rapidly developing DeFi.

What is WBTC?

WBTC stands for Wrapped Bitcoin, which is simply ERC-20 token representing Bitcoin. One WBTC is equal to one BTC. BTC can be converted to WBTC and vice versa. As an ERC-20 token, the transmission speed of WBTC is faster than that of ordinary Bitcoin, but the main advantage of WBTC is that it integrates Ethereum wallet, decentralized applications (dapps) and smart contracts. At the time of release, more than 280000 WBTCs were in circulation.

Who invented WBTC?

Wrapped Bitcoin was launched on the Ethereum main website in January 2019. Wrapped Bitcoin is a cooperation project between the main participants in the DeFi ecosystem (such as BitGo, Ren, Dharma, Kyber, Compound, MakerDAO and Set Protocol), which strives to bring more liquidity to the Ethereum network through investment in Bitcoin. The project is now controlled by a decentralized autonomous organization (DAO) called WBTC DAO.

What's special?

Since the overall value of Ethereum is significantly less than Bitcoin, this limits the growth of these protocols. By introducing Bitcoin, the protocol can improve liquidity, thus creating more collateral sources for its dapps. Wrapped Bitcoin also allows Bitcoin holders to hold it as an asset, and use DeFi dapps such as Compound to borrow or lend funds.

Since there is still a gap between Bitcoin and Ethereum - the chain itself cannot communicate with each other - people need to trust each other. Compared with BTC, Wrapped BTC will never have the same security level or trust free level as the original BTC, because it relies on people and organizations to manage the system rather than pure code.

In order to improve trust and transparency, WBTC regularly receives audits and publishes all on chain transactions and verifications of Bitcoin and Ethereum networks. Users can independently verify how many BTCs are sent to the WBTC address on the Bitcoin blockchain, and then check whether these transactions match the creation of WBTC tokens on the Ethereum blockchain. The reverse process of destroying WBTC to redeem BTC can also be tracked on the chain.

How are WBTC tokens generated?

The management members of the WBTC DAO decide on major upgrades and changes to the agreement, and who can act as the merchant and custodian of the management system.

Users who own BTC and want to convert it to WBTC must interact with the merchant. The merchant starts the process of casting or destroying WBTC tokens by executing a verification procedure to confirm the user's identity. The custodian holds the packed actual BTC and actually casts and destroys tokens on the Ethereum blockchain. When the WBTC is destroyed, the BTC is returned to the user from the trustee. When a new WBTC is cast, the BTC is taken from the user and stored by the custodian.

How to obtain WBTC token?

As WBTC is an ERC-20 token, it can be traded on a decentralized exchange (DEX) such as Kyber or Uniswap. If you want to replace BTC with WBTC, there are many available platforms, including Atomic Wallet, Coinlist, and Poloniex.

What can you do with WBTC?

WBTC can be used in DeFi for borrowing, token exchange, income agriculture and liquidity pool. Some DeFi platforms that support WBTC include Aave, Balancer, Compound, Kyber Network, MakerDAO, and Uniswap.

In general, WBTC is an Ethereum ERC-20 token representing Bitcoin, which can be exchanged 1:1 for BTC. BTC holders can use WBTC to participate in the decentralized financial (DeFi) ecosystem of Ethereum. The future lies not in how individuals use WBTC, but in what developers build with it. As an ERC-20 token without permission, WBTC has become another cornerstone of DeFi application in the developing "Money Lego" ecosystem. With the growth of DeFi itself, WBTC's use cases and applications will also grow.