Bitcoin has initiated the legion of thousands of cryptocurrencies in the market today. With the advancement in technology, several cryptocurrencies are showing potential to grow tremendously in the coming decades. One such cryptocurrency that emerged as the prime example of "wrapped" tokens is Wrapped Bitcoin.
wBTC has gained a massive amount of popularity over the past few months. There are several reasons to back up the prediction that Wrapped Bitcoin is going to explode in 2021.
Looking At 2021: Is Wrapped Bitcoin All Set For A Massive Rally This Year?
With a whopping surge of over 71% and an unstoppable price rally, 2021 seems to be the best year for wBTC. The concept of wrapping a token came in a bid to enhance Bitcoin's functionality and scalability in the market. It is also a better option for traditional BTC holders as a more sophisticated financial service.
Before getting into why Wrapped Bitcoin is going to explode in 2021, let's look at some of the factors that drive the value and demand of wBTC in the market.
#1. wBTC Unstoppable Rally
Wrapped Bitcoin is a unique intervention that helps bring Bitcoin to the Ethereum blockchain. It is a platform to create an Ethereum-based derivative of Bitcoin. BTC owners can easily take advantage of the derivative version of BTC they own to lend, stake, or yield farm on the Ethereum blockchain.
The "wrapping" of BTC in the ERC-20 standard provides traders, decentralized applications (dApps), and crypto enterprises a bridge to the Ethereum network, along with maintaining the exposure to BTC.
wBTC has shown massive growth since the beginning of 2021 by climbing to a whopping $64,796.44 on April 14, 2021. It sits at $54,199.13, as of writing, with a market cap of $8,782,111,798.
With its unique goal of taking BTC's value and integrating it with the Ethereum network's programmability, wBTC has positioned itself as a crypto token with huge potential and possibilities.
#2: Unique Features That Sets Wrapped Bitcoin Apart
Bitcoin is one of the oldest and largest cryptocurrencies in the market. But it has a relatively basic blockchain functionality that does not mark up to the advanced technologies today. Though it is less scalable, BTC has a potential user base and a liquidity pool of a dozen billion dollars than any other crypto today.
On the other hand, Ethereum was created with the more advanced technology of smart contracts as a viable platform for decentralized finance. wBTC was created by "wrapping" BTC in the ERC-20 standard, which paved the way for complete integration of a Bitcoin-like asset in a highly advanced space of financial decentralized applications.
The significance of wBTC is that it brought in high liquidity with the BTC market and scalability with the ETH blockchain technology. wBTC has become an easier option for exchanges, wallets, and payment services that work with Ethereum. The need for running two separate nodes for ETH and BTC network no longer exists, as the wBTC can support operations with just an Ethereum node.
Yet another unique feature of the wBTC token is its flexibility to switch to BTC and vice versa. Every wBTC token is an ERC-20 token that constitutes Bitcoin on a 1:1 ratio. Therefore, users can easily convert their Bitcoin over to wBTC or vice versa whenever they want, through various networks.
#3: High Liquidity
Another notable advantage that wBTC brings into the market is high liquidity. Ethereum has a large and diverse ecosystem. This massive spread out creates a lack of necessary liquidity to function on decentralized exchanges (DEX) and other platforms. A lack of liquidity affects the entire network, making the transactions slower and less effective for users.
wBTC brings in the liquidity of BTC into the flexible ecosystem of Ethereum, emerging as a highly potential token for traders and investors alike.
Scalability is one of the major features of a cryptocurrency that BTC lacks. Since Wrapped Bitcoin exists on the Ethereum network, which is highly scalable, transactions will be made faster and cheaper. In addition to this, users will also get more transaction and storage options by leveraging this unique cryptocurrency.
New Functionalities Of Wrapped Bitcoin
Now let's come to the question of why Wrapped Bitcoin is going to explode in 2021? Thanks to its developers, wBTC provides users with more new and advanced functionalities. It is made by integrating the hallmark features of BTC and advanced features of ETH like smart contracts.
Though Bitcoin is a popular cryptocurrency among investors and traders, it lacked smart contract functionalities in its complete form. wBTC has brought in the capabilities of smart contracts along with the vast user base of Bitcoin.
Users can easily earn rewards by staking their wBTC in popular network wallets. There are several versions of staking protocols in the market, and most of them require a user to lock their cryptocurrency into a smart contract for a specific time to exchange for rewards. Users who convert their BTC to wBTC can leverage these next-generation staking protocols to earn rewards easily.
Yield Farming: A Booming Protocol In The World Of DeFi
Yield farming is yet another DeFi protocol that is gaining popularity in the sector. Unlike staking, farming protocols have relatively fewer lockup periods. Several farming systems allow users to lend out wBTC with interest to other users in the network through farming pools.
Why Wrapped Bitcoin Is Going To Explode In 2021: The Bottomline
The increase in popularity of Wrapped Bitcoin can be attributed to the demand for Bitcoin and the popularity of the DeFi sector. wBTC can be deployed as significant collateral for Ethereum-friendly BTC holders to avail crypto-backed loans.
Wrapped Bitcoin wBTC continues to see considerable momentum because of several reasons. It allows long-term holders of BTC to earn passive rewards without turning over the ownership of their valuable digital assets. It has emerged as a highly flexible option with advanced features and security for users.
Given its overall usability, liquidity, and affordability, it's no surprise that wBTC is emerging as a cryptocurrency with massive potential for growth in the market. Considering its features and plan to engage deeply into more complex DeFi projects, crypto enthusiasts predict that Wrapped Bitcoin is going to explode in 2021, positioning itself as a prominent investment option.
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