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Bitcoin on the Ethereum Network?


Since Ethereum entered the picture, it has been looking to become the number one cryptocurrency. Though Ethereum dethroning Bitcoin is not yet happening soon, there are some good things in Ethereum that investors are attracted to. Fast transactions plus flexibility in making dApps, these are some traits that the crypto community loves about the digital currency. As for Bitcoin, we all know that it has experienced problems such as slow transactions and high fees.

But what if you can get the best of both world from Ethereum and Bitcoin? What if you can have Bitcoin essentially present in the Ethereum blockchain? WBTC or “wrapped Bitcoin” is a token that is tied to the value of Bitcoin. This is a combined effort of BitGo, Republic Protocol, and Kyber Network. According to them, there are two important effects of this cryptocurrency that is worth looking into.

One, this will allow Bitcoin to be in the Ethereum blockchain. Though this isn’t the first attempt since there are the likes of QTUM that has attempted to include smart contracts on Bitcoin’s own chain, Ethereum has remained to be the most dominant mode when it comes to making smart contracts.

Next, this will mean that Bitcoin can have an impact on the Ethereum blockchain. The value of the token will depend on the reserves of BitGo as well as the other participants in the project. This means that for every 1 WBTC, there will be an equivalent 1 BTC.

According to the blog written by Kyber, “Kyber will provide initial liquidity for WBTC tokens through our reserve, so that it can be exchanged like any other supported ERC20 token on our protocol. At launch, together with Republic Protocol, we will serve as initial merchants to provide a platform for KYC’d users to atomically swap between BTC and WBTC tokens”

Stability of Bitcoin

It is no secret that Bitcoin experienced a massive leap in 2017. From trading just around $1,000, it has leaped near $20,000 by mid-December. However, it has slipped back to around $6,500 by the time that regulators stepped in. Since then, it hasn’t regained even half of its all-time high.

However, one thing that is worth mentioning is the stability of Bitcoin nowadays. Bitcoin these days is more stable than tech related stocks such as Amazon and Netflix. Could this be part of the reason why Bitcoin was chosen to back the WBTC?

This isn’t the first concept of its kind. Tether has attempted to have its own stablecoin by having a cryptocurrency that is backed by the US dollar. However, there were many questions whether it has enough US dollars to back the fund.

Seamless Transition

The project aims to ensure that there will be a seamless transition between Bitcoin and Ethereum. A user can easily cash out to Bitcoin or could easily switch to WBTC. There are already a number of crypto exchanges that are willing to take on the token. However, it is still a mystery whether or not there will be an arbitrage between BTC and WBTC.

Could this be a good move to lock a token into BTC? Does BTC’s stability have something to do with this decision?

John Jayme

John is a crypto investor, enthusiast and copywriter. He is in charge of daily news and other emerging trends in blockchain technology.