Could Wrapped Bitcoin Be a Millionaire-Maker Coin?
Wrapped Bitcoin has been a top performer for its early investors. Is it too late to jump in?
The advancement of Bitcoin has led to the birth of thousands of cryptocurrencies over the past decade. While many of these altcoins are still nascent, there are several promising digital assets that could potentially generate massive returns in the future. Crypto analysts and industry experts have reasons to believe that Wrapped Bitcoin (wBTC) is one such asset.
Could Wrapped Bitcoin wBTC be a millionaire-maker coin? Thanks to the significant growth and the adoption rates that the asset has seen, wBTC does have the potential to be a millionaire-maker coin. The crypto asset is expected to continue its bull rally in the future.
So what are the factors that are driving wBTC’s growth? Before we explore that, let’s look at what wBTC exactly is, how it works and what makes it a great investment choice.
Wrapped Bitcoin: What is it?
Wrapped Bitcoin is a recent innovation that helps in bringing Bitcoin (BTC) to the Ethereum blockchain. wBTC effectively provides traders, crypto enterprises, and decentralized applications (dApps) a bridge to the Ethereum network while maintaining exposure to Bitcoin. The goal is to bring BTC’s price value into the picture and combine it with the Ethereum network’s programmability.
Each wBTC is an ERC-20 token that can be converted into a Bitcoin and vice-versa (1:1). Notably, you can make these conversions using various networks accessible to the public. This flexibility allows users to easily switch between wBTC and BTC to suit their investment strategy.
The Bitcoin that backs wBTC is transparently verifiable via a “proof of reserve” system that verifies the 1:1 backing between minted WBTC tokens and Bitcoin held by custodians. wBTC is part of The Wrapped Tokens project, which is a joint project of three enterprises - BitGo, Ren, and Kyber Network. The asset is maintained by a group called the WBTC DAO that now consists of over 30 members.
Is Wrapped Bitcoin wBTC a Millionaire Maker Investment?
wBTC is a cryptocurrency bursting with potential, and here’s why.
Bitcoin, the oldest and most popular cryptocurrency, has a massive user base and a liquidity pool of billions of dollars. However, its blockchain functionality is relatively basic by current standards. On the other hand, the Ethereum platform is designed to support more advanced use cases by employing the technology of smart contracts, giving rise to an entire industry dubbed “decentralized finance.”
By “wrapping” BTC in the ERC-20 standard, wBTC enables full integration of a Bitcoin-like asset into this advanced environment of financial decentralized applications, bringing along the immense liquidity associated with the BTC market. DeFi has exhibited remarkable growth on the Ethereum blockchain over the past year, and wBTC provides interoperability between Bitcoin and Ethereum.
Additionally, Wrapped Bitcoin makes the job considerably easier for exchanges, wallets, and payment services that work with Ethereum. Instead of running two separate nodes for ETH and BTC networks, they can support wBTC operations with just an Ethereum node. For these reasons and more, wBTC is a cryptocurrency that has the potential to rally significantly over the next few years.
Factors That Could Make Wrapped Bitcoin A Millionaire Maker
Various factors impact the price of wBTC, including the unique coin offerings and its functions, contributing to making wBTC a viable option for investors. Here are some factors that could make Wrapped Bitcoin a millionaire-maker.
wBTC offers a great deal of liquidity. The Ethereum network is diverse, and the distribution of funds can create a situation where decentralized exchanges (DEX) and other platforms lack the required liquidity to function optimally. Wrapped Bitcoin integrates Bitcoin’s liquidity into the flexibility of the Ethereum ecosystem. In this manner, wBTC bridges the liquidity gap between many centralized and DeFi products.
When compared to BTC, Wrapped Bitcoin provides users with more functionality. For instance, wBTC can take advantage of Ethereum’s robust smart contracts. Smart contracts are self-executing business automation protocols that are considered a core technology of the blockchain industry. They did not become a reality till the entrance of Ethereum into the market.
Scalability is another crucial advantage that Wrapped Bitcoin offers. Since wrapped tokens exist on the Ethereum blockchain, rather than on the Bitcoin network directly, transactions conducted with wBTC are much faster and cost less. Users also have more storage and transaction options while transacting with wBTC.
Role of wBTC in DeFi
The parabolic rise of Wrapped Bitcoin is widely attributed to the growth of Bitcoin and the booming DeFi sector. Ethereum-friendly BTC holders can use Wrapped Bitcoin as collateral to take out crypto-backed loans or deploy leveraged crypto investment strategies.
Conversely, wBTC holders can deposit their tokens in decentralized lending platforms such as Compound or Aave as a liquidity supplier to earn interest.
Staking is a popular DeFi functionality. Most staking protocols require users to lock their digital asset holdings into a smart contract for a set period in exchange for rewards. Users who convert their BTC over to wBTC can take advantage of these staking protocols.
Can Wrapped Bitcoin (wBTC) Become a Millionaire Maker?
Wrapped bitcoin has unlocked significant liquidity to the DeFi ecosystem and already displayed utility and dispensed value across Bitcoin and Ethereum since its launch in 2019.
With a market capitalization of $11 billion, wBTC is a booming asset that plays a vital role in the DeFi sector. The coin is predicted to experience significant growth in 2022 and beyond because of its various advantages over other cryptocurrencies.
These advanced capabilities and functionalities of Wrapped Bitcoin make it a potential millionaire-maker crypto asset.
Could wBTC Become a Millionaire Maker? Final Thoughts
The adoption rates and market capitalization of wBTC have been seeing a steady rise in recent times. The cryptocurrency has become very popular and is likely to continue its growth journey, making it a viable investment choice. The asset can also help investors diversify their portfolio.
That said, cryptocurrencies are volatile. Investors are advised to research and consider all factors before investing in wBTC or any other cryptocurrency.
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