Bitcoin Forum

I was curious that what is difference between the Wraped Coin vs Bitcoin. I still do not know clear about the Wrapped token but I think that Wrapping a coin allows it to be used on a non-native blockchain. Wrapping a token is essentially swapping one token for another token in an equal amount via a smart contract, or code on the blockchain that can store and send funds. but still I do not know the clear cut meaning and also use of The wrapped Tokens.
https://i.imgur.com/ov1eXVQ.jpeg

Wrapped Bitcoin is not Bitcoin on Bitcoin blockchain.

These wrapped ones are tokens on many chains that can be Ethereum chain, Binance Smart Chain, Solana chain and any other chains. These tokens are promised by their teams that they are backed by bitcoin with 1:1 rate.

Because, wrapped tokens have pegs, they can lose pegs (de-pegs) like stable coins de-peg (UST, TUSD etc.)

A beginner's guide to understanding wrapped tokens and wrapped Bitcoin (https://cointelegraph.com/altcoins-for-beginners/a-beginners-guide-to-understanding-wrapped-tokens-and-wrapped-bitcoin)
What’s Happening With Wrapped Bitcoin on Ethereum? (https://decrypt.co/115986/whats-happening-wrapped-bitcoin-ethereum)

You will ask a question "Why were these wrapped tokens created?"

• They were created to steal your bitcoins.
• Rather than buying and holding bitcoins, you buy these tokens and use them on other blockchains. When they de-peg to zero, you have a wrapped token in hand and have no bitcoins.

what tranthidung said is 100% correct.

Bitcoin is bitcoin. Wrapped bitcoin is not bitcoin. It's just some token that was given a name with bitcoin in it.
They (the token creators) can basically promise you anything they want (usually it's a promise they'll hold as much real BTC as they release their wrapped token)... If you want bitcoin, don't let anybody sell you some wrapped token instead...

You can use wrapped tokens on other blockchains, people use it for DeFi mainly. Before, you couldn't trade two coins from two different blockchains (not in a decentralized way anyway). Now and with Wrapped tokens, you can do that. For example, if you want to exchange BTC for USDT on Ethereum, BSC, or Polygon. WBTC would allow you to do that.

You still shouldn't use them though. Check this article I shared on this topic I made not a long time ago, to understand the risks.

[1] https://bitcointalk.org/index.php?topic=5420769.msg61281800#msg61281800

Bitcoin:
- Decentralized
- High security
- Can't be hacked and can't get attacked
- No one can control it
- Independent and wouldn't die because of other coins collapsed.

Wrapped Bitcoin:
- Centralized
- Poor security
- Could be hacked and could get attacked
- The developer control the coin
- Dependent, if Bitcoin collapse, this coin will collapse too.

So what's the point to buy and hold this shitcoin e.g. Wrapped Bitcoin?

I have learned to understand the difference between the two Bitcoin is the real deal.. why the Wrapped Bitcoin (WBTC) is something the creator said it's to help users be able to use btc in different blockchain but their hidden intention is to exchange your real btc with that token which might be dis-valued anytime. Just as @tranthidung .
I earlier believe all was Bitcoin before I was cleared here in this forum.

It was a way to convince Bitcoiners who didn't want to sell their Bitcoin that they could still hold on to their Bitcoin and trade it with shitcoins, or to take advantage especially of those yield farms.

So Wrapped Bitcoin makers (and all other Bitcoin IOU makers) simply say:

"Let us keep your Bitcoin safe, you take these IOUs from us and stake them or use them in liquidity pools and earn your yields and commissions. When you want your Bitcoin back, just swap out the IOUs".

They just wave some custodial nonsense into the mix so people still think they control their Bitcoin and that they can use their Bitcoin on other chains. They can't and they're not.

Then in addition to all you've all said, one needs to be very careful especially the newbies when some people are presenting them altcoins or tokens as bitcoin since they have similarities in the name that sounds a little like btc such as BTCs, BCH, BSC, BTS and many other, they will want to convince beginners that they are also bitcoin, but anything that is aside btc and it's common symbol that represe it logo is fake and not bitcoin.

Just like storing funds on Centralized Exchanges, I typically recommend that you only use Wrapped assets for very short term use.  For example.  If you have Bitcoin and want to purchase a BSC Token, Wrapping your Bitcoin and immediately purchasing the Token is not that bad.  Still risky, but less risky than keeping your Bitcoin Wrapped for a long time.

If anything bad happens to Binance, you do NOT want your Bitcoin to be Wrapped.  Why hold a fake Bitcoin anyway if you can hold the actual thing.  Makes no sense.  Just buy and hold Bitcoin, do not trust artificial versions of it because you may get very screwed!

-
Regards,
PrivacyG

and when they are insolvent like FTX, its not going to be 1:1 anymore. and it happened already just the same with wETH which was depegged.

so many IOUs were created and people gave up their BTC all for a token they can use in the platform to provide liquidity hoping to gain more on the defi platforms. its kind of a scam but seem to have worked to lure users.

Just think of a wrapped bitcoin in the same way we think about stable coins, stable coins assure you they will have one unit of fiat for each coin they release, governments also did the same many decades ago when they supposedly had their paper currencies being backed by gold, and now wrapped bitcoins work in the same exact way, as you may notice both exchanges and governments have broken their promises in the past, and I am sure the same will be true for wrapped bitcoin so I do not recommend you use it at all and if you want bitcoin then just buy it and hold it.

An additional note: most of the hacks that occurred in recent years were due to bridges that are used to use Wbitcoins on other blockchains and many tokens have proven that they do not contain sufficient cover, meaning that you do not guarantee that your money will get the same value deposited.

So what you will get is low fees and ease of “de-centralized” transfer, but unfortunately WBTC are centralized and therefore it is better to use a centralized platform because it is faster and cheaper (since we are talking about close risk levels)

Wrapped bitcoin is not really a Bitcoin and it's just made up tokens on some centralized shitcoin blockchains that can be frozen at any time, or gone to zero because of some exploit.
Situation is similar with stablecoins and fista currencies like dollar, and we already saw many stablecoins stop existing and wild swings in their price.
I would stay away from using any fake bitcoin wrapped tokens, and only alternative is using Bitcoin second layers for this, so you will not depend on other coins.
 

wrapped bitcoin is
btc->ethereum->erc-20->wbtc    3 peg distance from bitcoin

some sidechains coins subnetworks tokens and custodian balance are 1 peg steps from bitcoin
btc->liquid(lbtc)
btc->LN(msats)
btc->cex(btc balance)

though the 1 step pegs are still not 100% guaranteed convertible. its just less risk the less peg steps required
and all pegged coins/balanances are treated as IOU's until settled back to the bitcoin network as a confirmed bitcoin value

my personal risk awareness trust rating(my opinion based on flaws of each):
33%: btc->liquid(lbtc)
22%: btc->LN(msats)
11%: btc->cex(btc balance)
4%: btc->ethereum->erc-20->wbtc


the 1 step pegs are more trusted in a co-operative contract. but then there are many ways to not cooperate on the agreements of conversion and such you have to still be risk aware and take the risk dependant on how much value and convenience you want to risk in the side/subnetworks/custodian

i only rate sidechain coins as more trusted purely on things like them having some kind of multi-party federation peg thus less collusion by 1 attacher and having a blockchain of sorts to also mitigate certain attacks..
but i personally avoid any network thats not the bitcoin network

if i was to be want to invest in other currencies.. i too would take same principles of the main net vs their sidechains and subnets and be the same % for their risk vs mainnet holdings


usually best to keep hoard/main stash of coin in the mainnet of native true currency and only use daily spend amounts in the altnets

but again be risk aware, dont be duped into these altnets utopian promises of strength and security.

use them temporarily for a short time period.much the same as custodians.
dont treat these custodians/sidechains/subnetworks of 1 peg steps as solutions to bitcoin woes which should be deemed as bitcoin 2.0
think of them as service tokens for temporary service use

Well all the above said was right, there is no other than bitcoin, wrapped bitcoin is not a bitcoin they have different networks, while bitcoin was backed by blockchain while this wrapped bitcoin is under on ethereum network. It is only mirroring the value of bitcoin, which is only on the price but technically --it is not operated the same as bitcoin, there is no real meaning of decentralized except bitcoin backed by blockchain only. It sounds funny that this wrapped bitcoin claim itself that they have more features to use than bitcoin which it did not even do when it comes to protecting your privacy. The bitcoin protocol is unique to using smart contracts.

wETH isn't pegged? Put of every coin i wouldn't imagine for them to not be able to have a token burn so you can get your eth back out (that feels lazy they haven't)...

---

I couldn't confirm it anywhere but there was rumours wbtc would lose its peg (substantially) against btc because of the ftx insolvency and them being a main issuer of the coin.

The other problem with stablecoins and wrapped coins is that you can barely ever trade them 1:1, they're not quoted for market sells or buys in favour of the maker - so their price depends on how much you'll pay in fees too to do the trade and how liquid the wrapped token is - and so you'll probably never hold the true value of your coin if you "wrap" it until it gets unwrapped.

Simply put, it is for convenience's sake, to make certain transactions easy or possible. Since Bitcoin, and other coins for that matter that have their own native blockchains, can't be used on a different blockchain, innovators came up with wrapped versions. So these are basically tokens on different blockchains that mirror the price of Bitcoin. They can now be used on a network that otherwise cannot communicate with another network. These are not real Bitcoin, of course. The same goes with other wrapped coins.

To put it simply Bitcoin is real Bitcoin and wrapped Bitcoin is an IOU bitcoin.

Altcoins operate in their own network, completely separate from Bitcoin. They just create a new token/coin and say that they have Bitcoin reserves for it.

In reality it's just a fake Bitcoin. You don't really own Bitcoin when you buy a "wrapped" bitcoin, you're just buying a promise that someone will exchange that thing for Bitcoin in the future.

There's no such decentralized in Ethereum network, it's centralized and Vitalik Butterin has full control over the network. If it's decentralized, we wouldn't see any news hacker can rob users money.

Wrapped Bitcoin doesn't have any value, they just following Bitcoin price.

It's true you can convert your WBTC to BTC, but it's depends on the WBTC's team if they want to convert it or not. Which mean if they turn to be scam, you don't have any way to convert it since they wouldn't want to convert your shitcoin (WBTC) to BTC.

WBTC is erc-20 a special token of ethereum.
there are 2 ways to get back to btc.
first is a CEX swap token:coin
which is a deposit - trade - withdrawal 3 step process

second requires converting it to a native ethereum and then using a CEX to then convert from ethereum to dollar or btc on a cex market
thus its a 5 step process
wbtc - erc20 - eth deposit- trade- btc withdrawal

yes wbtc team can decide not to allow conversions to native ethereum
yes ethereum team can change its code to lock up erc-20 as erc-20 and not convertible to native ethereum
yes CEX can delist ethereum, wbtc

In simple terms, a bitcoin is a valuable asset, and a wrapped bitcoin is just a wrapper residing in another blockchain. In essence, you have exchanged your real bitcoins for fake ones and now you have opportunities to, for example, stake bitcoin in some DeFi pool. The only thing is that the risks associated with this activity are much higher than the profit you can get from this staking.

When you exchange your bitcoins for wrapped bitcoins, you involve a third party in the process, and that's not safe. In general, bitcoin tokenization is unprofitable in the long run because bitcoins only get more expensive over time, but all sorts of pools and DeFi protocols often crash and get hacked.

WBTC = Scam token

BTC = Real bitcoin runs on its native blockchain.

It doesn't matter how long you will be arguing about WBTC and the fact that WBTC was a scam token. The token gets its value from the trust of users. Once the funds that being used as reserved funds for WBTC would be stolen and then WBTC became garbage tokens. It's better to hold real bitcoin instead of using WBTC. Some people may not learn from what happened in the past when so many people were putting their money into the stable tokens and then it's gone like UST or anyother algorithmic token. Wrapped token has almost similar mechanism like stable token

As I know wrapped bitcoin is not in the bitcoin blockchain.

Why do I use WBTC? For decentralized trading.
https://bitcointalk.org/index.php?topic=5389259
I think that WBTC is not a scam because they store real BTC, but there are risks of blocking.
For me, using centralized exchanges is considered a big risk, so I find it easier to use WBTC for trading. But I do not recommend storing these tokens for the long term.

First of all, a wrapped bitcoin won't get you pregnant, lol. But aside from the joke it is just a method to bring bitcoin into other chains, it is not really bitcoin, but how could you trade bitcoin itself on Bep20 for example, you can't and in order to do that, you have to trade wrapped bitcoin. That's really it, but if you are that much interested in bitcoin then go do it with the real one, or if you are really interested in bnb and its tokens then do that, do not bring that into each other if you ask me.

Never made that much sense, you can't even properly take it out that way neither which would cause a lot of trouble during the transaction period as well, not really too smart.

Wrapped Bitcoin is not original Bitcoin which is develop my Satoshi nakamoto . It is controlled by an organization and its price is kept in line with the original Bitcoin . And it is also believed to be used as true Bitcoin.  And it allows everyone to transact Bitcoin through different chain like Ethereum, binance smart chain, Solana , polygon etc. This is basically how it works and we can use it constantly just like real Bitcoin. And every exchange and different organizations accept and give chance to exchange it as true Bitcoin.

"Wrapped Bitcoin" is not used as true Bitcoin, it's just a token that follows the price of Bitcoin.

You can buy Bitcoin using any kind of payment, fiat, altcoins, etc. Wrapped Bitcoin simply is not Bitcoin. It's just another thing altogether.

Wrapped Bitcoin followed Bitcoin price it is true and it is also true that Wrapped Bitcoin Wrapped Bitcoin is considered by many to be the same as real Bitcoin. And many withdraw Wrapped Bitcoin when withdrawing from exchanges to save the withdrawal fees. That is why Wrapped Bitcoin is very popular.  And Wrapped Bitcoin works as an alternative to real Bitcoin

Wrapped Bitcoin can be blocked because it is a token in popular ecosystems. Withdrawal fees from exchanges may be lower, but liquidity for large amounts is only available in the Ethereum ecosystem. I wouldn't store Wrapped Bitcoin in the Avalanche ecosystem for example.

Since Wrapped Bitcoin is a token and cannot be compared to original Bitcoin and since there is an organization to control Wrapped Bitcoin it is not fully decentralized so it cannot be fully trusted like Bitcoin and it is wise not to store it. And I myself do bitcoin transactions through bitcoin addresses so I am not very familiar with Wrapped Bitcoin.  But when withdrawing Bitcoin I see Wrapped Bitcoin Withdrawal option in every exchange. Do you know why exchanges keep Wrapped Bitcoin as an option when withdrawing real Bitcoin? Where it is not a real bitcoin

This is a centralized token that is controlled by an official organization that complies with the law. Exchanges use tokenized assets for the convenience of their clients. There is no need to look for a conspiracy here. But a tokenized asset is more convenient in some cases, for example, in terms of the speed of transactions and the cost of commissions.