Officially launched on Jan 30, the Wrapped BTC (WBTC) is a new ERC-20 token backed one-to-one with bitcoin. The token is developed by decentralized exchange startups including Kyber Network, Republic Protocol and cryptocurrency custody company BitGo.

The aim of Wrapped BTC (WBTC) is to “delivers the power of Bitcoin
with the flexibility of an ERC20 token”. In this way, the token could help to provide “greater liquidity to the ethereum ecosystem including decentralized exchanges and financial applications”.

BitGo CTO Benedict Chan characterized the new token in coincidence with bank notes in the old days, specifically that because gold was bulky and inconvenient, it was replaced by bank notes for easier payment. Chan added that cryptocurrencies are all the more liquid and stable compared to physical U.S. dollars,

Integrated with a technology called “atomic swaps” which allows cross-chain trading with little risk of monetary loss, Ethereum users can acquire WBTC transactions from certified exchanges, or so-called merchants, soon after the anti-money-laundering and know-your-customer (AML/KYC) procedures.

These merchants are described as “administrators who initiate the process of minting and burning newly wrapped tokens”, playing indisputable roles in the exchange. Some currently notable merchants of WBTC include: AirSwap, Dharma, ETHfinex, GOPAX, Kyber Network, Prycto, Ren and Set Protocol.

Many applications on the ethereum platforms like bZx, Compound and dYdX will allow immediate accessibility of the new token; whereas several cryptocurrency exchanges have conceived a part of the WBTC modal framework with a view to completely and transparently support WBTC in the near future.