Developers and innovators from three cryptocurrency companies are launching a Bitcoin ERC20 token on Ethereum. The new cryptocurrency, Wrapped Bitcoin (WBTC), is designed to combine the best of both worlds, bridging Bitcoin liquidity with Ethereum’s decentralized ecosystem. It will be fully backed by Bitcoin and is scheduled to launch in January 2019.
Three crypto industry are developing WBTC as a community initiative.
BitGo, which just raised $15 million from Goldman Sachs and crypto venture firm Galaxy Digital, is a fully regulated cryptocurrency custodian that securely purchases and stores digital assets on behalf of institutional investors. To launch the new Bitcoin ERC20 token, it joined Kyber Network, a decentralized liquidity pool, and Republic Protocol, a dark pool platform for institutional traders.
Says Loi Luu, co-founder and CEO of Kyber Network,
“Applications on Ethereum such as decentralized exchanges and financial protocols will all be able to use Bitcoin seamlessly, creating Bitcoin trading pairs which have been impossible until now. At the same time, the usage of Bitcoin will be expanded by having more decentralized use cases, such as exchange, loans, token payments.”
To get from zero to mainstream adoption, the new cryptocurrency will draw liquidity from Kyber and Republic Protocol. Together they’ll pre-mint WBTC tokens from their own Bitcoin inventory for the January 2019 launch. They’ll also make WBTC available for atomic swaps.
According to Taiyang Zhang, CEO Republic Protocol,
“The addition of atomic swap technology to the WBTC initiative will allow users to deposit and withdraw BTC/WBTC securely and with confidence, which will assist in enabling WBTC adoption to reach the masses.”
Tokenizing Bitcoin on the Ethereum network has the potential to give BTC the power of Ethereum. With WBTC, parties could use smart contracts along with Bitcoin to transfer value. For example, a smart contract could be used in a real estate transaction. In order for the seller to claim funds in escrow, they would need to send the contract an ERC20 token that represents the house (i.e. a tokenized deed). By using WBTC, which could contain the smart contract and the tokenized deed, a buyer would be able to pay for the house in Bitcoin on the Ethereum blockchain.
Several decentralized exchanges and financial projects are planning to participate in the launch in order to generate momentum and adoption for WBTC. MakerDAO, Dharma, Airswap, IDEX, Compound, DDEX, Hydro Protocol, Set Protocol and Prycto are all on board, with BitGo acting as the custodian.
According to the announcement, all WBTC issued will be fully backed and verifiable on-chain.
“To maintain the highest levels of transparency, the project dashboard will have proof-of-reserve showing that every Bitcoin stored by the custodian corresponds to the total outstanding WBTC. Minting will only be possible via the custodian with approval from the merchants, and when WBTC token holders redeem their tokens for Bitcoin, WBTC in turn will be burned. All such actions are verifiable on both blockchains, something only available with cryptocurrency.”
At launch, a decentralized autonomous organization (DAO) will be established to govern Wrapped Bitcoin and its ongoing developments. The DAO will be tasked with making major upgrades and adding new features. It will also be able to grow the network by adding merchants and new custodians.
This article was first seen on the Daily Hodl and can be found here: https://dailyhodl.com/2018/10/26/crypto-game-changer-new-bitcoin-erc20-token-on-ethereum-set-to-launch-in-january-2019/