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More concerning than slippage is the underlying risks posed by the wrapping process, which for Bitcoin, the biggest wrapped market, has to go through centralised Custodian.  Because Bitcoin is not Turing Complete wrapping cannot be automated via Smart Contract, so wrapping happens through centrally controlled programs like BitGo. This means that a decentralised asset can… Continue reading Are Wrapped Tokens Safe?

If we go back to Coinmarketcap and compare the prices for native BTC and wBTC you’ll find that the peg between them isn’t exactly 1:1, this is because the minting and burning process isn’t 100% efficient. That price difference is known as slippage which means that you will potentially lose value as you wrap and… Continue reading Disadvantages of token wrapping?

Strangely enough, you can wrap Ethereum to create wETH, and use that with ERC-20 compatible digital applications, because Ethereum’s native currency (ETH) was created before the ERC-20 token standard was introduced. One of the biggest challenges facing Ethereum is scalability. It has become a victim of its own success, with the cost of Smart Contract… Continue reading Wrapped Ethereum

You can think of each blockchain as a silo of potential value. Sometimes a Bitcoin holder will want to use the value their BTC represents to realise an opportunity within a separate blockchain. The most obvious reason is trading. Most trading by volume happens on centralised exchanges – like Coinbase, Binance or Kraken – and… Continue reading The benefits of wrapped tokens?

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’t, because the two sets of rules aren’t interoperable. Bitcoin is not Turing Complete and cannot interact with Smart Contracts. Think of it like trying to plug in a European… Continue reading Wrapped Bitcoin

If you are relatively new to cryptocurrency and are browsing the popular price comparison site Coinmarketcap to check the value of Bitcoin you’ll be confused to see more than one price. There is Bitcoin, ranked one by market capitalisation, and something called wrapped Bitcoin, ranked at #17 with a very similar, but not identical price.… Continue reading What are Wrapped Tokens and how do they work?

What you’ll learn: How wrapped tokens work Bitcoin and Ethereum examples Advantages and disadvantages Safety and security