Bitcoin is the original cryptocurrency, and, twelve years later, still the most popular cryptocurrency, as well as arguably the most straightforward in design. You can ask most anyone on the street about crypto, and the first thing they’ll say is, “You mean like Bitcoin?”. It’s often the first digital asset a new crypto community member will buy. However, the scalability of Bitcoin has been brought into question, mostly because of its limited design, slow transaction speeds, and high energy consumption. Also, there's not much you can do with Bitcoin except for holding it, so you may not be getting the most out of your crypto.
That’s where Ethereum comes in.
With the Ethereum and Bitcoin blockchains growing larger everyday, it’s only natural to want to combine the benefits of both. Ethereum’s smart contract technology, tokenizing capabilities, and upcoming upgrade to Eth2 make it an attractive option for any crypto or DeFi enthusiast. Unfortunately, most blockchains are not interoperable. So far, we have a web of decentralized systems that exist in parallel with one another, unable to meaningfully interact.
To truly make a decentralized system that’s worthwhile, it’s necessary to find ways to bridge these gaps. Thanks to projects like RenVM, BitGo, Kyber, PieDAO, and pNetwork, it’s now possible to use your Bitcoin on the Ethereum blockchain through wrapped tokens.
Wrapped Tokens
Wrapped tokens have their value pegged to a specific crypto, such as Bitcoin, so that they keep the same price despite the volatility of the crypto market. Some examples include the ERC20 tokens renBTC, wBTC, and BTC++, all of which are available through MEW swap.
If you’ve heard of stablecoins, it’s a very similar concept, but linked to another crypto (BTC) instead of fiat currencies. Some wrapped tokens are centralized around a custodial wallet or service, while others are doing their best to push the decentralized dream.
Moving your Bitcoin to Ethereum has many different applications. The main benefit is bringing Bitcoin’s value, community, and liquidity to Ethereum. Although Ethereum boasts powerful smart contract technology, Bitcoin is by far the largest crypto in terms of total market cap. Bridging the gap between Bitcoin and Ethereum allows for more DeFi opportunities, more innovation, and less isolation between chains.
It’s important to remember the risks involved when swapping for any crypto assets. Do your own research to determine the authenticity of a project or team before jumping into any investments, and never invest more than you are prepared to lose. Many of these companies have their smart contracts audited for stability and security, so it’s recommended you look into these audits and evaluate for yourself the security of the assets you’re investing in.
renBTC
Ren Project has built a RenVM protocol capable of exchanging BTC to an ERC20 token called renBTC and back again. Each renBTC is pegged 1:1 with a real BTC to back it up, so you can rest assured that you’ll be able to move your renBTC back to BTC at any time without any liquidity issues. The MEW wallet app has integrated this bridge right into the mobile interface, making this process simpler and more convenient than it’s ever been before.
Ren is on a roadmap to making renBTC the first decentralized solution for moving BTC to Ethereum. Because of this, sometimes it can take longer to reach all the confirmations necessary to move your BTC over. The RenVM protocol gives 24 hours in full to complete the transfer, which usually doesn’t take that long, but it’s definitely longer than you would expect. It’s always recommended to do your own research before fully committing to any crypto asset.
Read up on RenVM’s website for more information about the project and what else you can do with RenVM. You can also read a Medium post on RenVM’s road to decentralization. When you're ready, go to the Swap section on MEW wallet iOS or to the DApp browser on MEW wallet Android to interact with renBridge.
WBTC
The pegged token WBTC stands for ‘wrapped BTC’. It is a token initially developed through a partnership of BitGo, Ren, Dharma, Kyber, Compound, MakerDAO, and Set Protocol. Now it is managed through a Decentralized Autonomous Organization (DAO) called WBTC DAO. All Bitcoin used by WBTC is kept and maintained by BitGo as a custodial service.
It’s important to note that WBTC is a centralized solution for wrapped Bitcoin; it’s arguably the most popular as well. WBTC will never be as secure as the Bitcoin blockchain itself, since in the end it’s governed by people and not code, but it remains a good option for bringing BTC value to the Ethereum blockchain.
You can read more about WBTC on their website.
BTC++
BTC++ is a Bitcoin token that was created by PieDAO, an open-source organization with the main goal of expanding DeFi. BTC++ is a “BTC” token on Ethereum, but it’s made up of several different wrapped Bitcoin tokens, including wBTC, pBTC, sBTC, and imBTC. PieDAO allocates these wrapped BTC tokens in order to create a general and more balanced approach at a BTC peg while minimizing the risk of any one single wrapped BTC token collapsing from liquidity issues or malicious activity.
As always, it’s recommended that you read up on your investments before committing. Take a look at the PieDAO website for more information.
Put your Bitcoin to good use
Bitcoin has proved to be a reliable store of value for crypto, and it's not going anywhere, but now there is an option to have this investment work for you while it's growing in value. Whether you are coming into Ethereum from Bitcoin, or considering moving into Bitcoin from Ethereum, wrapped tokens can be a convenient bridge between the two blockchains!
Learn more
For more information on the ways you can use assets on the Ethereum blokchain, check out our DeFi article: https://www.mewtopia.com/talk-defi-to-me/
Curious about exploring more assets on Ethereum? Keep some tips in mind for swapping crypto: https://www.mewtopia.com/how-to-exchange-crypto-five-things-to-know/