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.

Ebang Plans Offshore Exchange as NASDAQ Share Prices Falter

Michael LaVere
  • Chinese bitcoin mining rig manufacturer Ebang has announced plans to launch an offshore exchange.
  • The firm's stock has fallen 11% since being listed on NASDAQ last Friday.

Chinese crypto mining company Ebang has announced plans to launch an offshore exchange amidst a drop in share prices. 

Ebang International Holdings, an ASIC mining rig manufacturer, has witnessed a decline in share prices of more than 11 percent since being listed on NASDAQ June 26. The company represented the second mining firm to have a U.S. initial public offering (IPO), with shares falling under the ticker EBON. 

Ebang’s stock launched last Friday with an initial 19.3 million shares offered, leading to the firm raising $101 million. Since opening, share prices briefly rose from $4.85 to around $5, before subsequently falling to $4.29. 

According to a report by Bloomberg on June 29, Ebang intends to launch an offshore cryptocurrency exchange before the end of 2020. The Hangzhou-based manufacturer expects total revenue to grow about 40% following the expansion, with Chief Financial Officer Chen Lei saying revenue could potentially double to $200 million. 

Chen called the stock’s launch a win for Ebang’s brand, despite being listed at a time of escalating tension between US and Chinese trade relations. Chen told Bloomberg the company seeks to draw more customers from overseas markets, including the US, as currently 90 percent of the firm’s sales come from China. 

Featured Image Credit: Photo via Pixabay.com