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The principle of BTC wrapped is to immobilize bitcoins on the Bitcoin blockchain, and to create opposite tokens on Ethereum, each of which has the value of a “real” BTC. This formula is meeting with growing success, since $ 101 million worth of BTC has thus been “transposed” on the ETH network.
11.151 BTC run on Ethereum
There is no shortage of tokens that replicate bitcoins on the Ethereum blockchain: WBTC, renBTC, HBTC, imBTC, sBTC,… The avowed aim of these BTC wrapped is to be able to take advantage of the favorable ecosystem of Ethereum for DeFi, the famous decentralized finance which is on the rise at the moment.
Source : btconethereum.com
In barely a year and a half, the number of bitcoins thus tokenized on Ethereum has multiplied by more than 100. According to the btconethereum site, around 11,151 bitcoins are currently transposed on ETH, or more than $ 101 million.
This bitcoin tokenization movement has accelerated sharply in recent weeks, as can be seen in the graph below. BITGO 's WBTC tokens are by far the most widespread, since they represent almost three quarters of these “Ethereum bitcoins” (73.2%). The renBTC are the second most represented, with a proportion of almost 10% of the total.
Source : btconethereum.com
Some concerns about securing these Ethereum “BTCs”
A month ago, Vitalik Burtin - co - founder of Ethereum - expressed his fears that so many bitcoins would be concentrated in the hands of intermediaries.
Indeed, in the case of WBTC for example, it is the company BitGo which serves as a trusted third party: users send their real BTC to a BitGo address, and the latter blocks them in exchange for WBTC on Ethereum.
Even if all these bitcoins held by BitGo belong to its customers, the company nevertheless has their private keys. In other words, it has full management of it. What is already not terrible in terms of centralization could become downright dramatic if hackers managed to get hold of even a part of these bitcoins.
DeFi offers great prospects for the use of cryptocurrencies, and Ethereum in particular. If we can rejoice that Bitcoin also benefits from this decentralized finance, the craze should not turn into madness, which would endanger user funds!
