Wrapped Bitcoin (WBTC) is a tokenised version of Bitcoin that runs on the Ethereum blockchain network. On Ethereum, Wrapped Bitcoin (WBTC) will exist as an ERC-20 token.
For practical purposes, WBTC behaves and is treated as if it was Bitcoin backed by reserves in an Ethereum contract.
To create WBTC, existing Bitcoin needs to be wrapped. Wrapping the BTC enables full integration of a Bitcoin- like asset into an environment of financial decentralised applications. With WBTC in place, blockchain projects can use Bitcoin’s liquidity and security to drive their own applications.
The process of wrapping refers to sending Bitcoin from a user's wallet to a smart contract, where it is held in reserve.
Since the BTC are placed in cold storage with multi-signature authentication, their security is retained. The WBTC smart contracts will allow users to convert Bitcoin back and forth into WBTC freely (similar to how one can convert gold into another form of gold).
Wrapped Bitcoin was first announced in 2018 and launched officially launched in 2019. It was created by three organisations in a joint project: BitGo, Kyber Network and Ren. The WBTC token has been developed in close coordination with leading Bitcoin exchanges and liquidity providers including (but not limited to) Bitfinex, BTCC, Kraken, Poloneix, ShapeShift, Unocoin and Bittrex.
Wrapped Bitcoin is a standard ERC-20 token that will exist on the Ethereum blockchain. For every 1 BTC deposited into the WBTC smart contract, an equivalent amount of WBTC will be created. The total supply of coins is expected to be around 100 million coins with around 20% being released initially in 2019.
WBTC helps transfer the value of Bitcoin into the Ethereum blockchain so that users can start generating higher returns with their Bitcoin (BTC).
With WBTC, Bitcoin can now be used in many decentralized applications that were not possible before. This new addition will give Bitcoin a higher value as more people are able to use it.