Bitcoin has now been turned into an ethereum token with the oldest crypto becoming just an ethereum dapp or with ethereum becoming one of the first bitcoin sidechain.
“Eight initial merchants will be facilitating conversion between WBTC and BTC: AirSwap, Dharma, ETHfinex, GOPAX, Kyber Network, Prycto, Ren, and Set Protocol,” Trustnodes is told, with the design similar to a stable coin, but for a very unstable asset.
BitGo is to manage custody in a joint initiative with Kyber Network, Ren (formerly Republic Protocol) and other mainly eth projects.
Similar to fiat centralized tokenization, you give your btc to one of the eight merchants mentioned above and they in turn give you wrapped btc (wbtc), an ERC20 token.
There is a difference here, however, because unlike tokenized fiat, there can be a reasonable level of proof and a lower level of trust.
That’s because we can see the bitcoin addresses and they can prove ownership by signing them. So one can be sure the token is 1:1 backed by checking these addresses against the wbtc smart contract.
Yet knowing something and having control over something are two different things because this could be 1:1 backed until they’re suddenly hacked or decide to disappear with the funds and so on.
The latter is perhaps unlikely because some of them are reputable projects, but there is some risk involved due to the fairly centralized set-up.
In return, however, bitcoiners can now use the entire ethereum ecosystem, from decentralized exchanges to eventually perhaps even DAI collateralization.
“WBTC standardizes Bitcoin to the ERC20 format, so DApps such as Compound, Dharma, dYdx, Gnosis, Maker, Set protocol and more can leverage Bitcoin for decentralized lending, margin trading and derivative markets,” the projects say in a press release before adding:
“By bringing Bitcoin’s liquidity to Ethereum, WBTC also makes it possible for traders to use Bitcoin value for token trades on decentralized exchanges (DEXs) such as AirSwap, DDEX, ETHfinex, IDEX, KyberSwap, Loopring, Radar Relay, RenEx, Switcheo Network, TheOcean.
Wallet providers and exchanges will now be able to reduce overheads with the ability to support multiple currencies while maintaining only the one Ethereum node.”
The same set-up could presumably be used for any other crypto with a wdoge perhaps making shibes very happy. On the other hand, that does concentrate power on the hands of the custodians, with efforts on-going to create two-way pegs in a decentralized manner.
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