Wrapped Bitcoin (WBTC) is a cryptocurrency that can be called a hybrid. The WBTC token is close to Bitcoin without being bitcoin. It’s similar to Ethereum also. So what is Wrapped Bitcoin? In this WBTC review, find what WBTC is and the potential of Wrapped Bitcoin’s price in USD.
What Is Wrapped Bitcoin?
Just ask yourself; what if you could mix the two largest crypto tokens in the world—Bitcoin and Ethereum? The result would be close to Wrapped Bitcoin. Find out more about the coin below.
Wrapped Bitcoin (WBTC) is a cousin of Bitcoin (BTC), which is the most famous of all cryptocurrencies. However, what is the difference between WBTC and BTC coins?
To understand this, we have to go back to the basics.
Bitcoin is the king of crypto and the first to have succeeded. Bitcoin serves as a payment method. Ethereum, on the other hand, being the second largest, is somewhat different. The Ethereum blockchain deploys smart contracts, which are contracts that execute once expected conditions are met. Smart contracts make decentralized applications (dApps) possible.
Now we know that Bitcoin and Ethereum serve different purposes.
Wrapped Bitcoin serves as a link between these two.
As you’ll see, WBTC has a foot in both Bitcoin and Ethereum.
On one hand, Wrapped Bitcoin is backed by Bitcoin, meaning that its price closely follows BTC. We, specifically, qualify Wrapped Bitcoin as a stablecoin because its price isn’t determined by the laws of supply and demand like other cryptocurrencies are. Instead, it follows another.
Additionally, WBTC is an ERC-20 token, making it compatible with Ethereum. The WBTC token can be used to write smart contracts and decentralized applications alike.
The Wrapped Bitcoin blockchain is how Bitcoin enthusiasts access decentralized finance applications. The WBTC token combines the value of Bitcoin with the functionality of Ethereum.
At the time of writing this article, the Wrapped Bitcoin crypto was the 12th largest crypto in the world with a capitalization of around 7.7 billion. The WBTC token is located between the crypto Polkadot (DOT) with its 8.3 billion and Tron (TRX) with its 7.1 billion market cap.
The Wrapped Bitcoin to USD equals $40,757.
Just keep in mind that the current price of Wrapped Bitcoin is not an indicator of if Wrapped Bitcoin will go up or if Wrapped Bitcoin will recover.
Wrapped Bitcoin was created at the end of January 2019. It’s the result of a collaboration between blockchain security firm BitGo, startup Kyber Network and Republic Protocol.
The Wrapped Bitcoin white paper, v0.2, was released on January 24, 2019.
In it, the WBTC founders acknowledge the growing popularity of ERC-20 tokens in the Ethereum ecosystem. From there was born the idea of creating a new ERC-20 token backed by Bitcoin. Users can now easily convert their BTC to WBTC for use on the Ethereum network.
All WBTC tokens are managed by a Decentralized Autonomous Organization (DAO) called WBTC DAO. Originally, WBTC DAO consisted of founders BitGo, Kyber Network and Republic Protocol. Today, there are more than 30 members. The WBTC DAO validates significant changes to the protocol and decides on who can become a merchant or custodian of WBTC.
At current, there is no Wrapped Bitcoin staking.
What Is Wrapped Bitcoin Used For?
Wrapped Bitcoin’s future provides liquidity to the Ethereum network and more generally to the decentralized ecosystem. As the leader of cryptocurrencies, Bitcoin has substantial leverage of the industry. Through WBTC, Bitcoin can now inject liquidity into the ERC-20 network.
In addition, the Ethereum blockchain offers greater transacting capacity than the Bitcoin blockchain. The Bitcoin network processes 3 to 5 transactions per second (TPS) while Ethereum reaches 20 to 30 TPS. By using Wrapped Bitcoin, Bitcoin users enjoy greater speeds.
Above all, WBTC is how you access the ever-growing world of decentralized finance. You have the option of using DeFi tools for crypto lending, token exchanges, yield farming and liquidity pools. Wrapped Bitcoin enables decentralized exchange platforms (DEXs) like Uniswap to exist.
The Characteristics of Wrapped Bitcoin
Let’s look at the specifics that characterize the Wrapped Bitcoin ecosystem.
The WBTC Stabilization Mechanism
The WBTC token is designed to replicate the price of BTC. You can exchange 1 WBTC for 1 BTC and vice versa at any time. The link between the prices of Bitcoin and Wrapped Bitcoin is permanently ensured by a “proof of reserve” system.
At any time, the official custodian of WBTC, i.e. BitGo, must have a stock of BTC equal to the number of WBTC in circulation. This proof of reserve is tracked by a blockchain. The balance of the BTC is ensured by a “mint” and “burn” system which governs the creation of WBTC tokens.
How Wrapped Bitcoin Tokens Are Produced
Unlike Bitcoin, Wrapped Bitcoin is not created through mining. Instead, WBTC is produced, which is minted, and destroyed, which is burned, based on user transactions. When a user wants to buy WBTC, the WBTC custodian creates the amount they request.
It’s then burned, which is to say withdrawn from circulation by being destroyed if the user sells it.
All mints and burns are recorded on the Ethereum blockchain.
Routine audits make it possible to compare the quantity of BTC stored by custodians and the number of WBTC tokens in circulation. This ratio should always be 1:1 with no exceptions.
As a cousin of Bitcoin, Wrapped Bitcoin (WBTC) is increasingly attractive to investors. However, as with all cryptocurrency assets, make an effort to acquire as much data as possible before investing or carrying out any transactions. Probe market sentiment as part of your research.
To establish its daily result, the index takes several things into account: the volatility and health of Bitcoin, which continues to reign supreme on the crypto market, news related to the universe and in particular changes legislation or even general activity in terms of trade.
As always, this index can guide you, but it is not the only thing to take into account during your future investments. It, nevertheless, allows you to know the general sentiment within the market.
Wrapped Bitcoin Fear and Greed Index
Updated:: 23 February 2024
Now: 79 Extreme Greed
Now: 79 Extreme Greed
Yesterday: 78 Extreme Greed
Last Week: 70 Greed
How Many Wrapped Bitcoins Are In Circulation?
At the time of writing this article, there are exactly 273,402 WBTCs in circulation. The maximum number of WBTC tokens is not officially limited. However, since each WBTC causes the blocking of a BTC token, the maximum number of WBTCs can never exceed that of 21 million.
The Price of Wrapped Bitcoin
Now that you know the historical and technical outlines of Wrapped Bitcoin’s prediction, let’s discover the changes in the price of WBTC since its creation.
The Price of Wrapped Bitcoin
Right now, Wrapped Bitcoin’s value sits around $41,000. As expected, we are therefore very close to the price of Bitcoin which is the same.
The year 2022 was not entirely favorable for Wrapped Bitcoin charts. That said, the entire crypto field is at half mast this year. Blame it on an unstable economic situation, the war in Ukraine and the consequences of the COVID-19 crisis.
Wrapped Bitcoin’s sock price started with a price of around $41,000. Between January 5 and March 25, the price of WBTC generally oscillated between $30,000 and $40,000. Then, the price of Wrapped Bitcoin temporarily exceeded $40,000 between March 27 and April 6. To date, the best performance of the year was reached on April 28 with a price of $43,616.
The price of WBTC then experienced a sharp fall, going from $37,545 on May 5 to $26,230 on May 12, a loss of almost 30% in just 7 days.
Wrapped Bitcoin Price History
Wrapped Bitcoin began its existence with a price around $3,000. By May 2019, the coin had already doubled its value and had a price of around $6,000. The WBTC price remained between $6,000 and $10,000 until October 2020.
From there, Wrapped Bitcoin’s forecast experienced a bull run. The price of Wrapped Bitcoin soared until April 2021. The maximum price for the first half of 2021 ($53,247) was reached on April 13. The price of WBTC then fell again and fluctuated around $30,000 until July 2021.
Wrapped Bitcoin then started its second bull run. The price of WBTC rose higher than ever in November 2021. The absolute record (ATH) of the price of WBTC ($61,043) was reached on November 10, 2021. Subsequently, WBTC resumed a downward trend.
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