Bitcoin WBTC running on Ethereum sparks community controversy

Ethereum founder Vitalik Buterin praised WBTC on Twitter on August 17th, sparking a debate between supporters and opponents within the community. Preston Byrne, a partner at the cryptocurrency law firm Byrne & Storm, also strongly criticized WBTC in response.

WBTC

Wrapped Bitcoin (WBTC) was launched on January 31st this year. According to the whitepaper, WBTC is backed 1:1 by Bitcoin and operates on the Ethereum network as an ERC20 token.

As Bitcoin, with the highest market share, cannot interact with mainstream Ethereum dApps, such as decentralized exchanges usually having only ETH trading pairs, WBTC aims to address this issue.

Controversy

Ethereum co-founder Vitalik Buterin tweeted that the WBTC solution is getting better.

https://twitter.com/VitalikButerin/status/1162666634940735488

This led to dissatisfaction from cryptocurrency law firm Byrne＆Storm partner Preston Byrne, who retweeted Vitalik's tweet and stated:

WBTC does not run on Ethereum. In reality, users send Bitcoin to an address they don't control, and in return receive WBTC claimed to be worth one Bitcoin by a third-party institution.

https://twitter.com/prestonjbyrne/status/1162759549381742593?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1162759549381742593&ref_url=https%3A%2F%2Fbeincrypto.com%2Fcryptocurrency-lawyer-slams-vitalik-buterin-for-tweet-praising-wbtc%2F

WBTC is primarily hosted by cryptocurrency custody service provider BitGo, and collaborates with 15 decentralized autonomous organizations (DAOs), including prominent projects such as Kyber Network, Prycto, Airswap, dYdX, Maker, Omisego, among others.

A report indicates that despite BitGo providing all WBTC custody details on their dashboard, the crypto community remains concerned about this centralization.

WBTC Growing Faster Than Lightning Network

Previously, ABM provided a detailed introduction to the Lightning Network. Currently, the amount of Bitcoin locked in the Lightning Network is about 911 Bitcoins, approximately $9.5 million, but has been declining since May this year.

In contrast, WBTC has been rapidly growing. According to DeFi Pulse, the current amount of Bitcoin locked is 562 Bitcoins, approximately $5.9 million.

The rise of WBTC can also be attributed to the cryptocurrency infrastructure Compound protocol. Compound is an open-source lending platform that, despite opposition, has added WBTC to its platform. To date, the platform has issued over $32,000 worth of WBTC loans.

Compound's CEO Robert Leshner stated that integrating Bitcoin into the Ethereum ecosystem with WBTC is a significant first step and one of the best applications so far.

Further Reading

• Cryptocurrency Loan Demand Reaches New Highs
• Current USDT Supply Indicates Bitcoin Could Reach $20,000

Join now to receive the most complete information on financial technology, blockchain insights, and industry examples!