With lots of different blockchains available today, it can be difficult to choose one to keep your investments in. It is undeniable that today the two biggest ones are the Bitcoin and Ethereum blockchains, concentrating more than half of all trades involving cryptocurrencies.
This created a necessity for the investors and token holders to be able to transit between these two environments without necessarily having to buy the native coin. The solution for the bitcoin holders was the WBTC or Wrapped Bitcoin.
What Are Bitcoin Tokens
Bitcoin (BTC) is a cryptocurrency created to act as conventional money like the USD coin, for example. The main difference between them is that the BTC is decentralized, not being controlled by any person or group, excluding the need for third parties in the operations.
It is considered the biggest cryptocurrency, inspiring many other virtual coins created afterwards. Bitcoin is considered the most important crypto asset in blockchain investment strategy, with specialized websites and marketplaces just for BTC holders.
What Is a Wrapped Bitcoin Token
Wrapped Bitcoin tokens are basically a way of using the BTC currency on the Ethereum Blockchain. The solution was created by three developers that wanted to develop a way of using Bitcoin tokens on the Ethereum network, in order to be able to use them in decentralized exchanges.
These wrapped cryptocurrencies are used mainly on DeFi platforms, simulating their native tokens. In the case of bitcoin and Ethereum networks, one of the main reasons for this practice is that transactions take considerably more time in the Bitcoin blockchain.
How Wrapped Bitcoin Tokens Work
The usage of wrapped Bitcoin is possible through the creation of a token on the Ethereum blockchain called ERC-20 Token. One wrapped Bitcoin (WBTC) is always worth one BTC and vice versa. This way, you can use them in the blockchain with the value always being backed by the Bitcoin’s price on the market.
These crypto assets make it possible for Bitcoin investors to make centralized and decentralized exchanges, using the best network for each situation. Both conventional and wrapped tokens provide a safe system with the equivalent amount for both tokens.
What Is DeFi
Decentralized Finance is a financial technology that allows the secure distribution of ledges, just like in cryptocurrencies. The DeFi ecosystem mainly focuses on empowering individuals, excluding financial charges from banks and companies.
This allows people to make exchanges without having to pay those fees and at any time of the day. Differently from a centralized exchange system, anyone can use decentralized finance on the internet, transferring funds in a matter of minutes.
The Dangers of Exchanging Wrapped BTC on Small Websites
When buying a wrapped token, especially wrapped BTC, there are some details you should pay attention to to avoid getting scammed. There are lots of websites where you can exchange these WBTC tokens and buy them, so paying attention to the website’s reputation is the first thing you should do.
Choosing a safe site to acquire wrapped cryptocurrencies can save you from many future problems involving the crypto exchange and the Ethereum blockchain. Here are some suggestions of platforms to buy wrapped BTC safely and avoid problems with other Bitcoin holders.
Another dangerous thing that can happen when not buying from trustworthy websites is to get charged by a different value from how much it actually should be. Many people reported that they paid more than the actual value of a Bitcoin on websites that were not famous and some of them even said that they did not receive the bought tokens at all.
One of the most used platforms by people looking for wrapped Bitcoin is Crypto.com. They have a ton of different cryptocurrencies for the users to buy, sell and exchange.
If you are looking for WBTC tokens, this is one of the best places to find them. Along with the website, they also have an official mobile app to buy the ERC-20 token whenever you want.
They also have support for different virtual wallets for you to have control of all wrapped Bitcoins on your account. The interface is also very user-friendly, with easy tabs and clear communication.
Binance is perhaps the most important crypto market available today, concentrating almost all virtual coins that you can find. Whether you are an NFT artist working with the Ethereum blockchain or an investor working their own Binance Smart Chain, this place has everything you need to wrap BTC or find smart contracts.
They have a great reputation both as a market and support community for seeking tips or a good investment. Here you can trade digital assets, explore other tokens and buy both WBTC and real BTC.
It is also good to remember that Binance goes far beyond just crypto exchange. They are specialized in the NFT marketplace and other crypto assets. You can find anything in their community, from tools to evaluate data about coins to tips about custodian mints and other topics.
When it comes to security, Gemini is considered one of the market leaders. Specialized in Bitcoin and Ethereum blockchain, they have a platform made especially for buying wrapped bitcoin.
Along with the fame of being one of the most trusted third-party platforms, Gemini also provides a highly liquid exchange with a strong security framework for the cryptocurrency space and many tools for people to understand more about Ethereum’s DeFi ecosystem.
Although Kraken may not be as famous as the previous ones, it is also a pretty solid market and safe for buying wrapped bitcoin. It is recognized by its particularly low fees for exchanges and purchases.
It is more indicated for experienced traders since it has many advanced tools for placing orders and exchanging requests. The pro version is also considerably cheap when compared to other platforms with the same features.
One of the cons is that it is not available in every U.S. state, being a problem for traders from certain parts of the country. Another problem with the platform is that it does not have many account funding tools and features, limiting the user’s options.
Wrapped Bitcoin vs Bitcoin – Which One Should You Choose
It is correct to say that there is no right or wrong answer to this question.
If you want to invest in the Ethereum network or Ethereum’s DeFi ecosystem, the Wrapped Bitcoin (WBTC) is definitely your go-to. It will allow you to use many more tools and ways of making deals and exchanges than any other Bitcoin form.
On the other hand, if you just want to store value without the need for smart contract platforms or a DeFi ecosystem, Bitcoin will fit all your needs without any problems.
Remember that both the conventional Bitcoin and the solution from WBTC Dao have the exact same market price, so you don’t have to worry about paying extra for WBTC tokens or the conventional ones. This guarantees that you can focus on what really matters to you and will fit your market needs, no matter if they are smart contracts with the ERC-20 token or just stores of value.
Conclusion on Wrapped Tokens
If you are an investor, the first thing you should do is think of what you want to achieve with these tokens. When you have a clear decision of your goals, it is way easier to find out which option is the best for you.
The wrapped Bitcoin has an objective purpose in its use, especially when talking about the uses of the ERC-20 token on Ethereum’s blockchain. The fact that the price of both is directly linked is a key factor for people being free to choose the one that really is better for them.
Now that you know everything you need about the wrapped Bitcoin and its main uses, it is time to decide if it is what you really need. Be sure to choose well-known crypto marketplaces in order to do safe and trustworthy transactions. This way, you avoid possible scams regarding these wrapped tokens.
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