ERC-20-Wrapped Bitcoin (WBTC) Launches on Ethereum Network

Colin Muller

The Wrapped Bitcoin (WBTC) network has gone live, and at time of writing 65 bitcoin have been “wrapped” into Ethereum ERC-20 tokens.

WBTC is simply a method of representing bitcoin as an ERC-20 token, so that it may be more easily manipulated within the Ethereum ecosystem. Each WBTC is backed one-to-one with an equivalent amount of bitcoin.

One of the main selling points of WBTC is that it incorporates tradeable bitcoin into Ethereum decentralized exchanges (DEXs) such as IDEX.

How Does It Work?

In practice, the function of WBTC will be perhaps less laissez faire than it initially sounds. Rather than being a free function that users can employ to wrap their own bitcoin, a complicated supply chain has been set up by some big crypto entities to deliver the tokens - complete with Know-Your-Customer and Anti-Money-Laundering checks (KYC/AML).

Users wanting to wrap their bitcoin will have to approach “Merchants,” offering the bitcoin asset and completing KYC/AML through them. The whitepaper states that “Merchants are required to hold the identity information of the user securely.”

wbtc1.png(source: WBTC whitepaper)

But the Merchants themselves do not mint tokens. Only “Custodians” can actually mint WBTC coins, and only when requested to do so by designated Merchants - and at this point the sole Custodian is BitGo.

The whitepaper states that “[i]n some sense custodians are trusted in the wrapped framework, as assets could be stolen or they might not honour the one-to-one backing.” Custodians posses the private release keys for WBTC tokens which they issue, and only they can disburse bitcoin back to Merchants upon request.

wbtc2.png(source: WBTC whitepaper)

"Third parties" will conduct quarterly audits of all WBTC to ensure the corresponding bitcoin asset are stored by the Custodians, according to the whitepaper. All Custodians and Merchants are holders of multisignature keys, which are required to manipulate WBTC contracts on sidechains.

All of this is to say that: Not just anybody can wrap their bitcoin into WBTC. Rather, the function within WBTC’s process is highly curated. While BitGo is currently the only Custodian, there are currently eight Merchant members of the network.

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Mysterious Whale Buys 20,000 Ether on Crypto Exchange Binance

Francisco Memoria

A mysterious whale has recently bought around 20,000 ether tokens, worth $4.3 million, on leading cryptocurrency exchange Binance. Estimates suggest the whale has accumulated 300,000 ETH over the last few weeks.

According to Su Zhu, the CEO of Three Arrows Capital, the Ethereum whale has been accumulating the cryptocurrency during its recent dip below the $200 mark, and has been helping it remain above it.

Some users speculated the whale was just adding a so-called “prop bid,” a move that attempts to manipulate the market by temporarily boosting a cryptocurrency’s price. It would involve the whale adding the order to attract attention and get other buyers entering the market, to then cancel its own order.

Evidence seems to suggest otherwise, however, as the whale’s order was filled and helped the price of ether rise. The order came, according to Finance Magnates, days after a crypto YouTuber claimed a sell order of 15,000 ETH on crypto exchange Bitstamp saw the cryptocurrency’s price drop.

Thanks to the whale’s orders, Ethereum’s ether is currently trading at $217, after rising about 0.6% in the last 24-hour period. Earlier today the cryptocurrency’s price jumped from about $205 to $225 in about an hour.

Whales have, as CryptoGlobe has been covering, been seemingly accumulating cryptocurrency over the past few months. Earlier this month a 15% drop in bitcoin’s price saw whales accumulate more BTC, as data from Coinbase showed its users with the largest balances (the top 10%) were mostly buying the cryptocurrency.

Curiously, a research report from May of this year published by crypto surveillance firm Chainalysis revealed only 376 whales held about one third of all ETH in circulation. These whales were shown to not move their ether very often, as they’re holding their crypto and not actively trading it.