Wrapped BTC Review: Liquid As Bitcoin, Versatile As Ethereum
Bitcoin might be the world’s biggest and most famous cryptocurrency, but that doesn’t mean it’s perfect—just look at its widely-publicized scalability and inefficiency problems. Then there’s ethereum, which is compatible with a wide range of versatile applications but isn’t as liquid as bitcoin. Wrapped bitcoin merges some of the best aspects both protocols offer, and this wrapped BTC review will explain how and why.
Bitcoin’s limited functionality is well-known in the crypto world. Other blockchains—like Ethereum and Solana—have stolen the limelight when it comes to important aspects like usability and transaction speed. In this wrapped BTC review, we’ll turn our focus to another crypto focused on solving this problem.
Wrapped bitcoin (wBTC) gets its name because it shares many features with bitcoin but can also be used on other blockchains, making it more versatile. Curious? Let’s review key features, wrapped bitcoin price history, and its overall usability to help you figure out if wBTC could be the right choice for you.
Wrapped BTC review
Wrapped bitcoin is similar to the original bitcoin in many ways. Above all, it always maintains the same value as bitcoin since it’s pegged to the currency and backed by reserves. However, unlike bitcoin, wBTC can run on the Ethereum blockchain—bringing a whole host of benefits, which we’ll run through shortly.
The idea behind the coin was announced in October 2018, and launched a few months later in January 2019. It’s a project founded by three big organizations in the blockchain space: BitGo, Ren, and Kyber Network.
What is wrapped bitcoin used for?
Wrapped bitcoin is an ERC-20 token that runs on the Ethereum blockchain, and its main uses have emerged as activities related to decentralized finance. These include:
- Staking. Multiple protocols (e.gCoinList) allow you to make money online by staking wBTC while it stands in your wallet.
- Lending. You can lend your wBTC out to others to earn rewards on DeFi lending protocols.
- Yield farming. Similarly, protocols like Compound allow you to lend your wBTC through yield farming pools to maximize your returns.
- Trading. Use Ethereum platforms like Uniswap to trade and earn money, maybe even earning from trading fees along the way.
This isn’t an exhaustive list—there are countless DeFi platforms out there that make use of ethereum, and wBTC can be used for the majority.
We’ll also delve more into the utility of the Wrapped Bitcoin protocol as a whole shortly.
Wrapped bitcoin price history
When it was first launched back in 2019, wBTC had a value of $3,467. That might sound like way too much for a new cryptocurrency, but remember: Wrapped BTC was specially designed to mirror bitcoin’s price.
However, it’s worth giving a quick summary in case you haven’t kept up with Bitcoin’s price movements. The first spike on wBTC’s timeline came in early 2021, when its value rose to $40,236. Then, just a few weeks later, the price increased again, to an impressive $63,436.
It dropped back down to its previous point that summer, before rising again at the end of 2021—this time to a value of $67,549. wBTC has since been hovering between $40k and $50k, but the upward trend over recent times could mean it will recover to the $60k mark again at some point (or maybe even higher).
This price history doesn’t give us particularly useful info on wrapped bitcoin since it’s more relevant to bitcoin itself. However, it is worth knowing that wBTC currently has a market cap of $12,938,707, putting it at number twelve on the list of cryptocurrencies with the greatest market capitalization. It’s a pretty big deal.
If that’s got your attention, you’ll be pleased to know that you can purchase wrapped bitcoin from most major exchanges, including Binance and KuCoin. But is it really worth buying?
What’s the point of wBTC?
Some people might think it’s a strange concept to launch a coin that’s worth exactly the same as Bitcoin, but don’t write wBTC off. Here’s why its unique features could help to solve some pressing blockchain problems.
It’s a well-known and often-discussed topic in the crypto world that bitcoin has problems with scalability and efficiency. Since Bitcoin was the first cryptocurrency to take off, it wasn’t built with advanced uses and technology in mind—nobody could even predict what those kinds of uses would look like. Rather, it was designed to be nothing more or less than an alternative currency.
That’s where wrapped bitcoin comes in—it was designed to take bitcoin further than it currently does, sporting the capacity to offer financial services and other uses rather than being a currency.
As it’s become more established, wBTC’s main selling point has been the way it works with Ethereum.
Since you can use wBTC on the Ethereum blockchain, it’s compatible with everything built on Ethereum, including diverse applications and decentralized finance platforms, from DeFi lending to gaming.. It can therefore take advantage of aspects from Ethereum, which was built with more advanced technological features that can execute smart contracts and host applications.
This makes it far more versatile than Bitcoin
Not only does Bitcoin have limitations in what you can use it for, but it also faces slow transaction times due to its inefficient proof-of-work process for verifying transactions. By using the Ethereum protocol, wrapped BTC overcomes this issue—transactions are quicker and tend to have lower transaction fees than anything using the Bitcoin network.
Faster speeds also mean greater scalability—bitcoin’s slow transaction times have really held it back.
Another major perk is that it’s possible to transfer liquidity between the Bitcoin and Ethereum networks. This is an advantage over simply using Ethereum, which has a spread ecosystem (meaning platforms can lack the necessary liquidity needed for peak functioning).
Given the huge liquidity of Bitcoin’s status as the largest cryptocurrency, it tends to hold more value than altcoins, and has plenty of liquidity. This helps to keep the Wrapped Bitcoin protocol running fast and efficiently.
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