How does Wrapped Bitcoin work?
Wrapped Bitcoin (WBTC) is a project that aims to bridge the gap between the Ethereum and Bitcoin blockchains.
It does this by allowing users to wrap their Bitcoin into an ERC-20 token on the Ethereum blockchain. This allows users to use their Bitcoin in Ethereum-based decentralized applications (dApps) and decentralized finance (DeFi) protocols. The process of wrapping Bitcoin into WBTC is simple and straightforward.
First, users must find a custodian or merchant who supports WBTC. These custodians and merchants are responsible for holding the user’s Bitcoin securely and providing them with WBTC tokens in exchange. Once the user has received their WBTC tokens, they can then use them in any Ethereum-based dApp or DeFi protocol that supports WBTC.
The process of unwrapping WBTC back into Bitcoin is also simple and straightforward. Users must find a custodian or merchant who supports WBTC and send their WBTC tokens to them. The custodian or merchant will then send an equivalent amount of Bitcoin back to the user’s wallet address.
Overall, Wrapped Bitcoin provides a bridge between the two blockchains, allowing users to take advantage of both networks without having to move funds between them manually. This makes it easier for users to access DeFi protocols and dApps on both networks without having to worry about managing multiple wallets or exchanges.
