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Wrapped Bitcoin (WBTC) price has been in the news lately as it started to experience increased volatility. The wrapped version of the BTC has a variety of use cases that can't be accomplished on the legacy BTC chain. If you are still struggling to decide which Bitcoin to buy, this article will make things easier for you.
On Thursday, the WBTC price is up 0.04% in terms of BTC. This means that investors and traders are prefering the wrapped version over the real Bitcoin. There could be a lot of reasons behind this premium, which are mentioned below.
Wrapped Bitcoin (WBTC) is a 1:1 tokenized version of Bitcoin that runs on smart contract blockchains like Ethereum, Polygon, Avalanche, etc. It is created by depositing Bitcoin into a designated Bitcoin wallet, and then minting an equivalent amount of WBTC by a 3rd party DAO. WBTC can be used to access Ethereum-based DeFi applications and protocols, such as lending platforms, decentralized exchanges, and yield aggregators.
The price of WBTC is typically very close to the price of Bitcoin, but it may trade at a slight premium or discount due to market conditions. For example, if there is a lot of demand for WBTC, the price may trade at a premium. Conversely, if there is a lot of supply of WBTC, the price may trade at a discount.
According to Coingecko, there are currently 162,775 WBTC in circulation. This puts the total market cap of the Wrapped Bitcoin token at $4.4 billion, making it the 17th biggest digital asset. The token is available on different blockchains like Ethereum, Polygon, Fantom, Optimism, Avalanche, etc.
If you are wondering how to buy WBTC, there are plenty of options. Apart from numerous centralized exchanges like Binance, Bitget, and Kraken, the coin is also available on DEXs like Uniswap. While the Wrapped BTC price usually trades in tandem with Bitcoin, there are still a few differences.
WBTC is an ERC-20 token, which means it can be used on the Ethereum blockchain. On the other hand, Bitcoin is a native asset of the Bitcoin blockchain. This means that WBTC can be used to access Ethereum-based DeFi applications and protocols, while the real Bitcoin cannot. Another difference is that WBTC is subject to Ethereum gas fees, while Bitcoin is not. This means that using WBTC can be more expensive than using Bitcoin.
WBTC is managed by a Decentralized Autonomous Organization, also known as a DAO. The DAO consists of 17 major stakeholders from the whole DeFi space. The members include Kyber, Ren, and BitGO. While the project seems to be quite credible, it is still nowhere close to the real Bitcoin in terms of decentralization.
Therefore, Wrapped Bitcoin price prediction would always remain prone to an added risk due to the involvement of a 3rd party. This also means that the project is nowhere close to the real Bitcoin in terms of decentralization. However, the former's use cases still outweigh the latter.
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Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.
