Bitcoin(BTC) vs wrappedBitcoin(wBTC)

[Fivestar4everMVP]

Today, I came across a crypto friend whom I hadn't seen for a very long time, and over a bottle of beer, we had a very long discussion, discussing majorly about crypto currencies and life in general..

As we were discussing crypto, I asked him if he's holding bitcoin at the moment, he said yes, I was curious to know how much Bitcoin, he refused to say though, but went further to tell me how he has his entire bitcoin staked for interest, then I began to advice him on how risky it actually is to hold bitcoin on a centralized exchange, but he quickly made me understand that he's not holding bitcoin on a centralized exchange but rather, on a non-custodial wallet, I asked if it's possible to stake bitcoin through a non-custodial wallet..

He then told me its very possible with wrapped bitcoin, he was probably ready to educate me on how wrapped bitcoin makes all the impossibilities of bitcoin possible, but I was quick to let him know that I know majorly every thing about wrapped bitcoin, and that they are no different from shitcoins - he was surprised, he then asked me how is a wrapped bitcoin a shit coin...

Then I began to explain to him that -
1. Wrapped bitcoin is not completely decentralized like the original bitcoin is..
2. Those who wrapped the bitcoin can decide to unwrap it, then his supposed bitcoin will ultimately return back to zero (0) dollars.
3. Wrapped bitcoin can only be traded on decentralized exchanges, liquidity was added by some persons, if those persons who added the liquidity decide to withdraw it, you are completely locked in and no way to sell your supposed bitcoin..

It was a lengthy discussion, but in the end, he asked what to do, I advised him to unstake his wrapped bitcoin and sell it immediately, then use the money to buy the real Bitcoin and hold on a good and trusted non custodial wallet like the one I'm currently using(mycelium), though not particular the best, but very trust worthy.

At the end, I was happy I was able to really educate him on the danger of holding wrapped bitcoin in the place of the real bitcoin, and this made me to imagine how many bitcoin investors out there, that are holding wrapped Bitcoin, and really consider themselves to be holding bitcoin..
Wrapped bitcoin is no different from any other altcoin out there, it is highly deceptive to think you hold bitcoin if what you are holding is wrapped bitcoin.

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[Nwada001]

I support all your above statements, adding to that the creators of wrapped Bitcoin are just after taking off all their users' real Bitcoin and giving them something else in return.

3. Wrapped bitcoin can only be traded on decentralized exchanges, liquidity was added by some persons, if those persons who added the liquidity decide to withdraw it, you are completely locked in and no way to sell your supposed bitcoin..

WBTC can't only be traded on decentralized exchanges; a lot of centralized exchanges also support its trade, Binance is trading it with about 4 active pairs: WBTC/BTC, WBTC/USDT, and WBTC/ETH, but they all have lesser trading volume compared to other coins active there, and I believe most of the wrapped tokens are being listed on big centralized exchanges because they want to convince their holders that there is no difference from the original coin that they wrapped to another one, so why they have hidden their true agenda behind their proposed advantage over the real Bitcoin or whatever coin the case may

[Oshosondy]

3. Wrapped bitcoin can only be traded on decentralized exchanges, liquidity was added by some persons, if those persons who added the liquidity decide to withdraw it, you are completely locked in and no way to sell your supposed bitcoin..

Wrapped bitcoin can be traded too on centralized exchanges. It is not bitcoin though.

It was a lengthy discussion, but in the end, he asked what to do, I advised him to unstake his wrapped bitcoin and sell it immediately, then use the money to buy the real Bitcoin and hold on a good and trusted non custodial wallet like the one I'm currently using(mycelium), though not particular the best, but very trust worthy.

He did not tell you the amount he is staking, It could be a big amount of bitcoin. You should let him know the differences between hot and cold wallets and why cold wallets are important.

[Adbitco]

I think we are privileged to know more of all these things than those out there, you know sometimes when trying to educate people on how to go with bitcoin or altcoin they alway felt of knowing the best than you, sorry to say this, likely same thing happened to me though it was about bitcoin discuss but altcoin. Someone ran to me about a coin that was about to launched yet haven't so, they were asked to invest on the coin then during launching they all have access to it and probably can withdraw and sell, what i did was to look at him twice and asked him to borrow me the money let me use it for important business than putting money in a mouth of crocodile which he will never get back again.

To cut the long story short, i told him the reason why he shouldn't invest in that token and why he must make a turn from that project and he stops, guess what?
After 2 months thereabout he ran to me saying that platform has crashed that people are panicking, those who invested with a motive to make millions are in their respective home crying for their lost. This was how he would have made serious lost, today whatever thing comes up he must inboxed me to confirm before going further.

[UchihaSarada]

Wrapped bitcoin is not bitcoin but a tokenized coin that tries to beg its value with bitcoin. The peg can be de-pegged.

Tokenized btc coins on coinmarketcap

If you need examples, SoBTC Wrapped Bitcoin (Sollet): https://www.coingecko.com/en/coins/wrapped-bitcoin-sollet

It lost the peg in November 2022 and has never reclaimed the peg.

Then I began to explain to him that -
1. Wrapped bitcoin is not completely decentralized like the original bitcoin is..

It is minted by a developer team and fully centralized, not decentralized.

2. Those who wrapped the bitcoin can decide to unwrap it, then his supposed bitcoin will ultimately return back to zero (0) dollars.

They can make rug pull or the peg can be de-pegged by market volatility or attacks.

3. Wrapped bitcoin can only be traded on decentralized exchanges, liquidity was added by some persons, if those persons who added the liquidity decide to withdraw it, you are completely locked in and no way to sell your supposed bitcoin..

Wrapped bitcoin tokens can be traded on centralized exchanges too. It depends on centralized exchanges to list those tokens or not list those tokens, but your statement is not true.

Wrapped Bitcoin is on Binance, Kucoin, Kraken, Coinbase, more.

[Don Pedro Dinero]

Wrapped bitcoin is not bitcoin but a tokenized coin that tries to beg its value with bitcoin. The peg can be de-pegged.

Tokenized btc coins on coinmarketcap

I had heard of wrapped bitcoin but did not know about all these coins pegged to the bitcoin price. What is the point of them? The only one I see is to catch clueless people like the OP's friend.

With the dollar, if I see sense that there are some stablecoins because there is no dollar crypto today, but there is a bitcoin already, unique and original, that was also the first cryptocurrency of those existing today in the market. So why buy bad copies?

[UchihaSarada]

With the dollar, if I see sense that there are some stablecoins because there is no dollar crypto today, but there is a bitcoin already, unique and original, that was also the first cryptocurrency of those existing today in the market. So why buy bad copies?

They are not copies of Bitcoin, not forks of Bitcoin.

Bitcoin forks are a lot but they are Proof of Work altcoins from Bitcoin source code that is modified by those fork developers.

How many Bitcoin forks are there?

Tokenized bitcoin tokens are tokens and they are not Proof of Work coins.

[NotATether]

If I remember correctly, WBTC runs on the Ethereum network. So why would you bother with it? WBTC has no innovations at all and it can be compared to something like USDT.

Sadly pretty much all new coin projects these days are only concerned with the financial parts of things such as supply, the peg, and burning instead of technological innovations like in the early days of this industry.

[pooya87]

I had heard of wrapped bitcoin but did not know about all these coins pegged to the bitcoin price. What is the point of them? The only one I see is to catch clueless people like the OP's friend.

That's exactly the reason, to catch newbies who don't know any better.

The principle is usually the same too with all tokens (including stable coins). The creators of such tokens have no money, no revolutionary idea or anything they could use to make money. So instead they sell "air". They simply create these tokens and start selling them to newbies, making money in the process!

The fact that there is also "staking" on top of it where you get profit for holding your bitcoins in THEIR pocket shows what a filthy Ponzi scheme this is
These things don't fall apart like regular schemes since there is a market where people keep trading them. In other words some of them manage to create an artificial utility that lasts as long as the gamblers keep trading. Then it falls apart catastrophically.

[buwaytress]

It does strike me as strange that after advising your friend to sell his WBTC, he didn't tell you that he actually (supposedly) gets back the same BTC 1:1 if he redeems those wrapped BTC for actual BTC?

I mean, sure, you can sell the WBTC and then buy back BTC but you'll lose on the exchange (lose twice actually). If he'd actually known enough about wrapped Bitcoin to educate you, he might have understood how it works...

[Fivestar4everMVP]

If I remember correctly, WBTC runs on the Ethereum network. So why would you bother with it? WBTC has no innovations at all and it can be compared to something like USDT.

Well, you are wrong , wBTC basically has a contract running on every blockchain, but the wBTC contract on Ethereum blockchain was the very first I think, so it definitely is enjoying the first mover advantage, but like I said, you could look through WBTC's coinmarketcap page, I took some shots which I share below, every single blockchain has a wBTC contract running on it, except for the very new blockchains of course..

[Z-tight]

Actually I invest in coins that have only recently appeared, because they always have more potential in future than BTC. For example, recently invested in the new coin RADIX, this coin has an impressive and profitable staking system. If you don't know about this project before say me thanks later

Are you shilling for this shitcoin, nobody is going to believe you that centralized, new shitcoins have more potential than BTC, whether now or in the future, i don't know about the coin you mentioned and i am not going to spend 2 seconds of my time finding out what it is, because i guess that's what you want. There's nothing impressive about staking shitcoins because you will probably lose in the end, anyway it is a free market, so each to their own; but don't spread misleading information because you want to shill.

[Despairo]

Wrapped Bitcoin is a fake Bitcoin, but your friend must know Bitcoin run in other network e.g. ERC-20, KCC, BSC, and any other centralized chains are no longer real Bitcoin anymore. There are many people want to mislead people to use their "fake Bitcoin".

If I remember correctly, WBTC runs on the Ethereum network. So why would you bother with it? WBTC has no innovations at all and it can be compared to something like USDT.

The innovations is you can use this "fake Bitcoin" to trade with other ERC-20 tokens in swap sites, staking, connect to dApps, that's all. Based on this quote, it seems only stupid people are want to use this "fake Bitcoin".

To receive WBTC, a user requests tokens from a merchant. The merchant then performs the required KYC / AML procedures and verifies the user’s identity. Once this is completed, the user and merchant execute their swap, with Bitcoin from the user transferring to the merchant, and WBTC from the merchant transferring to the user.

[Blitzboy]

It's cool that you're watching out for your buddy, but don't dismiss WBTC as another run-of-the-mill shitcoin just yet!

You're right about the centralization bit, but hey, the Bitcoin network ain't completely decentralized either. Remember those pesky mining pools? And if the WBTC unwraps, it doesn't vaporize into thin air; it's just back to being BTC.

Pulling out liquidity can indeed leave folks high and dry, but that's a risk inherent in the wild west of DeFi. Also, WBTC is tradeable on centralized exchanges, too, bro! Your mate may be onto something with his WBTC escapades. So, next time, just chill and enjoy your beer without raining on the WBTC parade.

[Learn Bitcoin]

Are you shilling for this shitcoin, nobody is going to believe you that centralized, new shitcoins have more potential than BTC, whether now or in the future, i don't know about the coin you mentioned and i am not going to spend 2 seconds of my time finding out what it is, because i guess that's what you want. There's nothing impressive about staking shitcoins because you will probably lose in the end, anyway it is a free market, so each to their own; but don't spread misleading information because you want to shill.

I guess yes. he is shilling for that shitcoin. Look at his post. It's like a Twitter thread where he comments and suggests this shitcoin. I somewhat agree with the statement. Those shitcoins have more potential  . Wait, don't get me wrong. Those shitcoins are on the market and creating FOMO using social influencers. We all know what their target is. The influencers say this coin will do 100x in the next two months or a few weeks. People will buy those shitcoins, and the team will increase the supply limit once they reach their target. It's like a Ponzi scheme. Eventually, they will rug pull. Whoever enters first and can take their profit in two weeks will be in profit. The people who come late will lose their entire investment.

[Bitcoin_Arena]

After the ICO shitcoin hype where token creators would take away valuable Bitcoins and Ether from gullible newbies in exchange for tokens of no value, some scammers sat down a thought about tokenizing Bitcoin, DeFi and NFTs and here we are again in yet another scam cycle.

I wish people could open their eyes. Getting wrapped bitcoin in exchange for the valuable real bitcoin is no different to giving a stranger your legitimate fiat notes in exchange for some meaningless clone paper that they claim has an equivalent value to your real fiat notes. I am glad you managed to teach your friend about something value.

[elevates]

This is quite common, many believe wrapped Bitcoin is Bitcoin. The best explanation for such people is to question them first by asking whether Bitcoin transactions can be performed outside Bitcoin Blockchain. Those who are confused would say yes and eventually argue. To explain them you only need to show the deposit address of Bitcoin on Binance. They have seperated deposit address for WBTC and BTC & BTC (segwit). I had a similar experience and I used this trick to explain the difference.

The peculiarity with these guys is that they would believe an exchange but won't believe on text available on Bitcoin.org. If you even show them the whitelaper they will ignore it or will come out with something brand new to counter you. When you use a reputed exchange as an example then they will not question you further. I felt that you friend was far educated about Bitcoin that is why he understood you so easily.

[Lucius]

As we were discussing crypto, I asked him if he's holding bitcoin at the moment, he said yes, I was curious to know how much Bitcoin, he refused to say though, but went further to tell me how he has his entire bitcoin staked for interest...

Your question was definitely not appropriate, because why would you need to know how many Bitcoins someone has, or how much money they have in their bank account or gold in their safe?

It was a lengthy discussion, but in the end, he asked what to do, I advised him to unstake his wrapped bitcoin and sell it immediately, then use the money to buy the real Bitcoin and hold on a good and trusted non custodial wallet like the one I'm currently using(mycelium), though not particular the best, but very trust worthy.

It surprises me that someone who should have a much better understanding of the risks of storing sensitive information uses and recommends to others as the main storage a wallet used on mobile devices. After online wallets, it is almost certainly the riskiest way of storage (long term) and we only use such wallets as hot wallets and some smaller amounts.

At the end, I was happy I was able to really educate him on the danger of holding wrapped bitcoin in the place of the real bitcoin, and this made me to imagine how many bitcoin investors out there, that are holding wrapped Bitcoin, and really consider themselves to be holding bitcoin..
Wrapped bitcoin is no different from any other altcoin out there, it is highly deceptive to think you hold bitcoin if what you are holding is wrapped bitcoin.

If you invest in something that you are not sure what it is about, then you definitely have a problem - and considering that there are various projects that use Bitcoin in their name, then it is quite normal that some are convinced that they have something that they actually do not have.

[Fivestar4everMVP]

As we were discussing crypto, I asked him if he's holding bitcoin at the moment, he said yes, I was curious to know how much Bitcoin, he refused to say though, but went further to tell me how he has his entire bitcoin staked for interest...

Your question was definitely not appropriate, because why would you need to know how many Bitcoins someone has, or how much money they have in their bank account or gold in their safe?

Well, nothing serious here really, like I said in the op, he is a good friend of mine, and sometimes, several of us who are fiends try to know how much Bitcoin the other person is holding, not to get jealous or envy or anything, but to particularly know if to buy more bitcoin or not, it is just like  a fun competition we usually have, where each of us want to own the highest bitcoin...

Lets say for example, he told me he's holding 1.5 bitcoin and I am sure he's telling the truth, and what I hold at that time is just 1 bitcoin, I will instantly find motivation to buy extra 0.6 bitcoin so as to hold more bitcoin than him..
So wanting to find how many bitcoin he held, was just for fun and motivation, that's all.

It was a lengthy discussion, but in the end, he asked what to do, I advised him to unstake his wrapped bitcoin and sell it immediately, then use the money to buy the real Bitcoin and hold on a good and trusted non custodial wallet like the one I'm currently using(mycelium), though not particular the best, but very trust worthy.

It surprises me that someone who should have a much better understanding of the risks of storing sensitive information uses and recommends to others as the main storage a wallet used on mobile devices. After online wallets, it is almost certainly the riskiest way of storage (long term) and we only use such wallets as hot wallets and some smaller amounts.
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If you read the later part of that same line, I clearly stated that the recommended wallet is not particularly the best, but yeah, I agree with you, but also understand that a good mobile wallet is just as secure as the device it's installed on, I've being using mycelium wallet since 2018 or so, can't vividly remember, but it's been a very long time, I've never had any issues with it..

And besides, the person I recommended the wallet to is not a newbie in crypto, he knows he way around crypto very well, and would go for a better more secure wallet like hardware wallets, if he feels the wallet I recommended is not secure enough..

I simply recommended that wallet because he wont have to spend a dime or wait up to 5 minutes to get it and start using, but for a hardware wallet, he will spend money to order it, and still wait a couple of days or weeks for it to arrive, he might even end up using that as an excuse as to why he didn't convert he's wrapped bitcoin to real bitcoin at the time he was advised to do so.

[dragonvslinux]

The most concerning part of this story is that the fact he's staking his wBTC for interest. After a quick search I found the providers for this interest:

Compound Interest rate (APY)
0.02% (Lending)

Aave Interest rate (APY)
0.0002–0.7741% (Lending)

CoinLoan Interest rate (APY)
3.2–4.2% (Lending)

FMFW.io Interest rate (APY)
1% (Staking)

So unless he's staking his wBTC for very low interest, it's likely he's gone for CoinLoan, which looks like another Celsius waiting to happen (as is another centralised borrowing/lending platform).  

This is why it's never worth risking your entire stash for 3-4% interest. And otherwise unless you're using your wBTC to engage in smart contracts, there is no reasoning for holding it either.

There is a purpose for wBTC imo, in order to engage with the Ethereum network while holding value in Bitcoin, but gaining interest in it is not what wBTC is for...

Wrapped bitcoin is no different from any other altcoin out there, it is highly deceptive to think you hold bitcoin if what you are holding is wrapped bitcoin.

To play devils advocate, wBTC is different from other shitcoins, as it's value is pegged to Bitcoin (unlike most shitcoins apart from BNB-Bitcoin). But you're right you're still holding an altcoin at the end of the day.

At any point the SEC could declare it a security, or otherwise the centralised company could face lawsuits for X,Y,Z, and the whole house of cards could collapse, unlike Bitcoin obviously.