If you’ve been dabbling in Bitcoin or crypto assets, chances are that you’ve heard of Wrapped Bitcoin. While they’re similar, there are some stark differences between Bitcoin and Wrapped Bitcoin – we’ll unpack these differences (and more) in this article.
History
Bitcoin
Bitcoin first came on the scene in 2009 when an individual or collective founded it under the pseudonym, Satoshi Nakamoto. Nakamoto is the same name that appeared on the 2008 whitepaper with details on the functions of the Bitcoin blockchain and its role as the foundation for the entire crypto market.
One of Bitcoin’s first and most notable transactions occurred in 2010 when a man used 10 000 BTC to purchase two pizzas from Papa John’s.
Wrapped Bitcoin
Wrapped Bitcoin was launched in 2018 through collaboration between BitGo, Kyber Network, Ren, and other community partners. This objective was to bring Bitcoin’s liquidity to Ethereum’s DeFi ecosystem and improve all centralized apps. You have to wrap BTC before it can work on other blockchains.
Wrapped cryptocurrencies allow users (Bitcoin holders, for example) to use crypto coins on a non-native network. Initially, many less-informed crypto users and investors were confused about the new token and how to make it work.
What Are They, And Why Were They Created?
Bitcoin
Bitcoin is a digital currency designed to function as money and an alternative payment method without needing a middleman. It was the first cryptocurrency created in response to the 2008 global recession.
According to Bitcoin’s whitepapers, it was created to decentralize exchanges and mitigate government involvement as much as possible.
Wrapped Bitcoin
Wrapped Bitcoin is a tokenized version of Bitcoin held in reserve. It’s effectively a cryptocurrency designed for the Ethereum platform.
The Ethereum blockchain is known for being used in the DeFi space, and building DeFi applications (or dapps), so Wrapped Bitcoin was invented to ensure that people can use what would’ve been potentially stagnant Bitcoin tokens on the Ethereum network.
Wrapped Bitcoin is still a 1:1 representation of Bitcoin, meaning that Wrapped BTC doesn’t lose any of its value.
Price History
Bitcoin
Over the years, Bitcoin has seen its fair share of fluctuations but also positive growth. At the time of writing, Bitcoin is priced at just over $20 000, a massive drop from the $69 044.77 it reached in 2021.
Bitcoin’s lowest price came in 2013, when you could get one coin for a mere $67.81, which has since grown by over 30 000 percent. Like most cryptocurrencies, Bitcoin’s price primarily revolves around feelings and projects made by Bitcoin users. As a result, it can be quite volatile.
Wrapped Bitcoin
Wrapped cryptocurrency usually has the same value as the original currency, and WBTC is no exception to the rule. Wrapped Bitcoin is currently priced at $20,586.08 but reached its high in 2021 when it was valued at $70,643.40. Its all-time low came in 2019 when it was priced at $3,139.17.
Market Cap
Bitcoin
Bitcoin is at the very top of market cap rankings, with a current market cap of $379.94 billion. For the sake of comparison, this is 67 percent less than the market cap it experienced last year and the market cap of $1.2 billion in May 2013.
Wrapped Bitcoin
Wrapped Bitcoin is ranked 19th in terms of market cap and has a market cap of $5,040,381,205. Its market cap dominance currently sits at 0.485%.
Daily Transactions
Bitcoin
In 2022, Bitcoin has been experiencing around 250 000 transactions daily. Last year, Bitcoin experienced a record high of 400 000 daily transactions, primarily due to another surge in the popularity of crypto assets.
Wrapped Bitcoin
There isn’t much data on how many transactions occur daily; however, at the time of writing, $264,959,138 WBTC was traded in the last 24 hours.
Block Size
Bitcoin
Bitcoin has a block time of 10 minutes and a block size of 1 MB. Those new to crypto tend to think that 1 MB is a small amount, but it’s enough to facilitate more than 2000 transactions.
Wrapped Bitcoin
There is currently no accurate method to answer this question, but Wrapped Bitcoin probably has the same block size as regular Bitcoin.
Similarities
- The two maintain the same value.
- Wrapped Bitcoin was created by a group, and Bitcoin is reported to have been founded by a group.
Differences
- An individual or group of people founded Bitcoin, but WBTC was created via a collaborative effort between several groups.
- WBTC aims to expand Bitcoin’s reach, particularly on the Ethereum blockchain, whereas BTC aims to promote decentralization.
Risks
Bitcoin
Bitcoin’s objective of facilitating decentralized exchanges and finance does, in some way, cause problems. The lack of taxation, for example, would be problematic if it were to challenge fiat currencies.
In addition, Bitcoin is often the subject of cyber attacks and fraud. Since there is no way to retrieve lost or stolen coins, each transaction must be made carefully, and the necessary security measures should always be taken.
Wrapped Bitcoin
Generally, Wrapped Bitcoin is a relatively safe concept but still presents certain risks. One risk would be that a platform could unlock the real BTC and leave users with fake WBTC.
Where to Buy
Bitcoin
Prospective BTC holders will be happy to hear that there are plenty of platforms upon which you can buy and exchange BTC. Some of the most notable ones include:
- eToro
- PayPal
- Kraken
- CoinMama
- Bisq
- Robinhood
- KuCoin
- Pionex
- Luno
- Bitcoin.com
- Coinbase
- Crypto.com
- Binance
Wrapped Bitcoin
You can find Wrapped Bitcoin on most exchanges that you’d find regular Bitcoin, so chances are that if you can buy Bitcoin on an exchange, you can buy Wrapped Bitcoin there too. For example, on Coinbase’s centralized exchange, you can find multiple Wrapped cryptocurrencies.
You can purchase Bitcoin on a decentralized exchange such as Uniswap, but you may have to have Ethereum.
Exchanging Bitcoin for Wrapped Bitcoin
Bitcoin and a Wrapped Bitcoin token are pegged to maintain the same value or a 1:1 relationship. In this sense, you wouldn’t exactly be making a trade or an exchange; you’d be “wrapping” your Bitcoin.
On most platforms, you can get Wrapped tokens via your wallet. For instance, on CoinList, after your wallet has been funded with Bitcoin, click “Wrap” while inside your Bitcoin wallet and insert the desired amount. Once you’ve done that, hit “Confirm Wrap,” and you’ll officially have Wrapped Bitcoin tokens.
Future Plans
Bitcoin
There’s much speculation around what could happen to Bitcoin in the next decade or so, with some even saying it’ll become the 21st-century equivalent of gold. Speculation aside, Bitcoin’s future largely revolves around scalability or how the Bitcoin network can be improved in terms of transaction speed and volume.
The network can only handle so many transactions at a time, which is primarily why Bitcoin has yet to become a fully mainstream way of transacting. Innovations such as Lightning Network are aimed at making Bitcoin work better.
Wrapped Bitcoin
Given the affordability of a Wrapped token, developers are rushing to expand the concept. There is a push to introduce WBTC into the more complex DeFi concepts to introduce more staking options.
FAQs
Is Wrapped Bitcoin taxable?
Wrapped tokens are still viewed as exchanging one crypto asset for another, so in this sense, they’ll be subject to capital gains tax in most countries.
Is Wrapped Bitcoin better than Bitcoin?
Comparing Bitcoin and Wrapped Bitcoin is dependent on your crypto trading objectives. For example, if you want to use your tokens for DeFi transactions or are interested in dapps, Wrapped Bitcoin may be the right choice for you. However, if you want to keep a store of value, Bitcoin could be the better option.
Who controls Wrapped Bitcoin?
The Wrapped Bitcoin protocol is overseen by a decentralized autonomous organization (DAO). The Wrapped Bitcoin DAO has 17 members representing stakeholders from the DeFi ecosystem.
Each member holds a key to the multi-signature wallet that secures the system.
What are smart contracts?
Smart contracts are programs stored on the blockchain that only run when they meet certain conditions.
What do merchants do to WBTC tokens?
Merchants initiate the process of minting or burning WBTC tokens, so if Bitcoin holders want to convert their Bitcoin, they’ll have to interact with a merchant.
Sources:
https://www.gemini.com/cryptopedia/wbtc-what-is-wrapped-bitcoin
https://www.coingecko.com/en/coins/wrapped-bitcoin
https://www.investopedia.com/tech/what-will-happen-bitcoin-next-decade/
https://www.finder.com/za/how-to-buy-wrapped-bitcoin
https://coinstats.app/blog/how-to-buy-wrapped-bitcoin/
https://www.securities.io/what-is-wrapped-bitcoin-wbtc-and-why-its-so-important/
English 
French 
German 
Italian 
Spanish (Spain) 
Spanish (Mexico) 
Portuguese 
Japanese 
Polish 
Bulgarian 
Czech 
Danish 
Dutch 
Estonian 
Finnish 
Greek 
Hungarian 
Latvian 
Lithuanian 
Romanian 
Russian 
Slovak 
Slovenian 
Swedish 
Chinese (China) 
Chinese (Hong Kong) 
Korean 
Norwegian 
Turkish 
Indonesian 
Ukrainian