But what happens if, for example, you want to use Bitcoin within an Ethereum-based DEFI application, to gain interest or take out a loan? You can\u2019t, because the two sets of rules aren\u2019t interoperable. Bitcoin is not Turing Complete and cannot interact with Smart Contracts.<\/p>\n\n\n\n
Think of it like trying to plug in a European electrical device in America, it isn\u2019t possible without an adapter, because the underlying electrical networks work in different ways. So a wrapped token is like a plug adapter for cryptocurrencies from different blockchains.<\/p>\n\n\n\n
So now you hopefully have an idea of what a wrapped token is, you\u2019re probably wondering how you wrap Bitcoin to use within the Ethereum ecosystem and then unwrap it back to plain old BTC?<\/p>\n\n\n\n
To wrap Bitcoin you need to send it to a Custodian who will hold your BTC in a reserve, then for a fee will mint a synthetic wBTC on a 1:1 basis and send that to an Ethereum address that you provide. The actual mechanics are more complicated, but as a user, the process is that simple.<\/p>\n\n\n\n
When you want to unwrap your wBTC, you send it back to the Custodian who burns it and releases the original BTC held in reserve.<\/p>\n\n\n\n
BitGo are the biggest wrapped Bitcoin Custodian\u00a0with over 274,000 BTC held in custody to produce an equivalent amount of wBTC with value over $12bn.<\/p>\n","protected":false},"excerpt":{"rendered":"
But what happens if, for example, you want to use Bitcoin within an Ethereum-based DEFI application, to gain interest or take out a loan? You can\u2019t, because the two sets of rules aren\u2019t interoperable. Bitcoin is not Turing Complete and cannot interact with Smart Contracts. Think of it like trying to plug in a European […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[563],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/8175"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=8175"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/8175\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=8175"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=8175"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=8175"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}