Difference Between Wrapped Bitcoin And Bitcoin

Blockchain-based cryptocurrencies such as Bitcoin and Ethereum are popular. Various blockchains now have their own set of operations, functions, and protocols. They are unable to communicate with each other because of this disparity.

While this improves the reliability of a blockchain-based cryptocurrency, it complicates establishing an interoperable cryptocurrency exchange or system in which data from one cryptocurrency is transferred to another. To address the issue of interoperability, specific more contemporary blockchains, such as Polkadot, were built. Wrapped tokens were established to solve a problem and allow communication across early networks like Bitcoin and Ethereum. Visit https://bit-iq.io/ for more information on bitcoin trading.

What is a wrapped crypto coin?

Wrapped crypto coins are cryptocurrencies linked to the valuation of other cryptocurrencies like gold, equities, shares, or real estate and are used on DeFi platforms. The original commodity is ‘wrapped’ in a digital crypt, and a new token is produced to be used on different platforms. Wrapped tokens enable emigrant assets to be utilized on any blockchain, allowing for network interoperability. Wrapped tokens must be recognized and handled by a custodian company that will wrap and unwrap the asset because they are tied to another purchase. The first wrapped Bitcoin tokens, denoted in wBTC, were utilized on the Ethereum blockchain using smart contracts, allowing investors to earn a guaranteed income.

Introduction To Wrapped Bitcoin

Wrapped Bitcoin (WBTC) was introduced in 2019 to use Bitcoin (BTC) on the Ethereum network. It was founded by a consortium of three programmers, including BitGo, Kyber Network, and Ren, rather than by a single person. These companies are leaders in distributed finance and intend to make it possible to use Bitcoin tokens on the Ethereum platform. The Blockchain network is well-known for its DeFi transfers and is a popular venue for developing DeFi apps. Unfortunately, if you have a large number of Bitcoin tokens, you won’t utilize them on Ethereum.

Furthermore, operations on the Bitcoin network take much more time than those on the Ethereum platform. Wrapped Bitcoin is an ERC-20 coin, or an Ethereum standard coin, designed by the consortium to allow users holding Bitcoin deposits to partake on the Ethereum blockchain. WBTC is always worth one BTC, equivalent to stable coins like Tether (USDT) and USD Coin (USDC), which are pegged to the value of a particular currency. Bitcoins are stored in proven reserves; thus, WBTC is always backed by BTC.

Difference Between Wrapped Bitcoin And Bitcoin

Wrapped Bitcoin, it should be noted, is a tokenized form of Bitcoin that may be utilized in Ethereum’sDeFi system. The procedure of minting WBTC necessitates the usage of reputable merchants that retain your Bitcoin and then give you Ethereum-compatible WBTC tokens. Consider the case when you have a considerable quantity of bitcoin units. You want to transmit money through Ethereum, or maybe you want to create some decentralized applications (apps) on the Ethereum network. You wish to utilize your Bitcoin assets, but you cannot do so. Instead, you go to a reputable dealer who takes time to confirm your identification and double-check that everything is in order. The trader then passes to a trustworthy third-party custodian.

Wrapped BITcoins are created by the custodian and are ERC-20 tokens. The amount of WBTC units you pledge to deliver is the same as the amount of Bitcoin units you promised to provide. You’ve kept your BTC up to this point. WBTC may now be transferred from the custodian’s account to the merchant’s Ethereum-compatible cryptocurrency wallet. It’s now time to switch. You submit your BTC to the trader, and they send you the WBTC through an exchange. You can return to the trader and claim your WBTC later when you’re ready to get your BTC back. Because there is no reserve remaining, the merchant burns the WBTC.


Wrapped cryptocurrency refers to a tokenized form of a cryptocurrency supported by the authentic coin. Wrapped Bitcoin is a tokenized version of Bitcoin that has been held in reserve. WBTC was created to operate with Ethereum-based systems, allowing Bitcoin to integrate with the Ethereum network. When considering acquiring cryptocurrency, keep in mind that the coins are destroyed once they’ve been redeemed with reputable merchants. It’s also important to keep in mind that it can never be more marketable because the WBTC is connected to Bitcoin. Before you invest in wrapped bitcoin, think about your objectives and ambitions, along with market volatility.