There are many different types of cryptocurrency that have pretty frankly convoluted and complex supply chains. Visit websites like bitcoin revolution to trade in bitcoin with the help of advanced AI technology; the platform is suitable for even novice traders. Bitcoin (BTC) is one of these, having an on-and-off relationship with the US dollar over the years. Today, BTC is becoming more and more competitive with other assets. We’re now seeing it traded for US dollars, Euros, and USD-backed stablecoins.
Wrapped Bitcoin to the Rescue?
Bitcoin offers a new form of financial freedom to many users simply because one can utilize it to buy products or transfer funds overseas. However, there are some issues regarding price volatility and transaction times that have been causing friction among merchants and consumers.
That is why we are starting to see stablecoins come into play. While these offer a good solution, in theory, they still have problems and drawbacks that people cannot ignore. They also have a somewhat brittle structure that makes them susceptible to manipulation and fiat-to-crypto price fluctuations. The problem with stablecoins is too often a lack of people using them.
Wrapped BTC represents the next generation of cryptocurrency: one backed by the original (stabilized) Bitcoin — the more stable and popular unit. However, it prevents people from using these stablecoins while providing a real-time method of converting their Bitcoins into USD or other currencies. In essence, it creates an entirely new alternative to existing alternatives which has never existed.
Wrapped Bitcoin empowers consumers to access and transact with the currency of their choice and does so efficiently. It offers instant conversion and facilitates faster transactions, thus making payments more stable for merchants. The best part is that it’s a decentralized platform; there are no exchange fees or hidden costs — simply a secured wallet.
Why would anyone want a wrapped token?
This cryptocurrency is helpful for merchants looking to accept payments securely, efficiently, and quickly. For example, if a merchant receives BTC as payment and then converts it to USD or whatever other currency they wish to use, they have the same risk as any other currency available today.
They may also suffer from the fees involved with the conversion process if they do not have an exchange account to make things simple. Therefore, wrapped Bitcoin allows merchants to convert their assets into USD in real-time should be of great interest to them. Also, Wrapped Bitcoin offers them instant access and liquidity — something that users cannot say of fiat currencies.
Differences between bitcoin and wrapped bitcoin
The wrapped bitcoin stores the reserves of actual bitcoin in a smart contract of the ethereum network. It allows you to use your Bitcoin as if it is a stablecoins. You can convert your BTC into USD or any other token on the Ethereum network (EOS, IOTA, etc.). Also, as the Wrapped tokens are on the Ethereum blockchain, they can be used by other dApps created on the Ethereum network. The conversion from BTC to Wrapped by setting the exchange rate and then transferring actual BTC funds.
To mint WBTC, deposit BTC into a trusted liquidity provider. The provider will then issue WBTC tokens which can be immediately sold on exchanges or used as if they were actual bitcoin without ever exposing the merchant to the risks inherent in dealing with Bitcoin.
Is wrapped bitcoin better than bitcoin?
People developed wrapped Bitcoin to offer merchants a safe, secure, and efficient way to accept bitcoins as payment. By using Wrapped Bitcoin, a merchant will instantly know the price of their product or service in USD or the currency of their choice.
Merchants can use this cryptocurrency immediately after purchase, just like traditional fiat currency. Since WBTC is based on Ethereum, you can easily make payments between any cryptocurrency and have them instantly converted into USD, EUR, or other currencies of your choice.
This cryptocurrency is a smart contract that requires certain conditions to be met before it enters circulation. The team at Ripple Labs funded Wrapped Bitcoin, and the currency’s adoption of ETH was increased by nearly 30x due to the backing of Ripple Labs and its technology.
Additionally, the market will shift to an Ethereum-based cryptocurrency from Bitcoin. Therefore people are more willing to accept it as a viable form of currency. People cannot say the same for other blockchain-based options in the digital world today, and that could be said of WBTC in the future. Fees are always a problem with Bitcoin, but wrapped bitcoin allows merchants to avoid those costs when accepting payments for their goods and services.
Merchants have access to a secure and cheap way of converting their bitcoin into fiat currency — backed by tangible assets and offers instant liquidity.
