cBTC - A Bitcoin-Backed Monetary Protocol

[James tector]

I have been working on the idea of Bitcoin as Digital Capital and have developed a Layer2 Bitcoin that could make a lot of sense to implement the Bitcoin protocol as a medium of exchange and eventually become an unit of account.

cBTC is backed by Bitcoin but with many more programable features that Bitcoin base layer does not allow.

It has features that every Bitcoiner would want:

- Bitcoin yield (gain Bitcoin yield)
- cBTC would always be redeemable for BTC
- cBTC as medium of exchange within a complete Bitcoin infrastructure
- The system would be open source
- The bitcoin holder would maintain custody of his Bitcoin during the whole process
- Serves as a liquidity provider for L2 like Lightning
- Many more

I have published the initial idea on Github https://github.com/jamestector-coder/cBTC/blob/main/v.3.%20cBTC%20Whitepaper%2002%20Nov.%202025%20(FAQ%20included).pdf  and would really love to have some feedback from Economists and also developers and the feasibility of this new Bitcoin based coin.

Thanks for the people that will take their time to study it and give some feedback.

James Tector

[AB de Royse777]

"c" stands for "Collateral"?

[James tector]

Hi Royse777,

The idea was that it was c for "currency" but "collateral" could function as well.
cBTC is more like a wink at CBDC's, just instead of Central Bank Digital Currencies it would be Bitcoin Currency.
The system is the ground layer for an automated Bitcoin Central Bank currency.

[ABCbits]

The PDF state this.

Each LP contract carries one vote, independent of BTC size

I may be wrong, but it sounds like vulnerable to sybil attack where a group could make as many as LP contract as possible.

[James tector]

Hi  ABCbits,

Thanks for your time in going through the Whitepaper.

There is always a possibility of collusion to vote on the change of the metrics, however not really at their benefit.
By keeping it as 1 LP one vote, even small LP will have voting power and every BTC deposit to the protocol will have to happen onchain. Splitting a BTC in 10 for example, to make 10 0.1BTC deposits, will become expensive and the changes to the distribution protocol they could eventually trigger a vote on, would be counterproductive for the LP.

It is in theory possible but not productive for the LP's that would try to game the system as it would weaken the protocol.