As a seasoned analyst with over two decades of experience in the financial sector, I have witnessed the evolution of digital assets from mere curiosities to transformative tools reshaping the global economy. The introduction of cbBTC by Coinbase is an exciting development that underscores the maturation and mainstream adoption of cryptocurrencies.
Coinbase is introducing a new token called cbBTC (Coinbase Wrapped BTC), which is based on the Ethereum network and is equivalent in value to one Bitcoin that Coinbase owns.
As reported in a press release distributed to crypto.news, it’s been announced that the cbBTC token can now be traded on both the Base and Ethereum (ETH) platforms.
Wrapped Bitcoin, represented as cbBTC when offered by Coinbase, is essentially a digital equivalent of Bitcoin (BTC) that can be utilized on Ethereum or other blockchain platforms. This transformation allows Bitcoin holders to engage with Decentralized Finance (DeFi) applications more seamlessly. WBTC serves as an earlier example within the category of wrapped assets.
In August, Coinbase shared a mysterious tweet hinting at a fresh wrapped Bitcoin offering. This announcement was made via Coinbase’s official account using the abbreviation “cbBTC” and mentioning that it would be available soon.
After September 11th, the Twitter account associated with Base X posted an image that appeared to represent the emblem of the cbBTC.
— Base (@base) September 11, 2024
Details of cbBTC
Users of Coinbase now have the option to transform their Bitcoin into cbBTC when moving funds from their accounts to Base or Ethereum addresses. This new token can be utilized in well-known DeFi platforms such as Aave (AAVE), Compound (COMP), and MakerDAO, enabling users to lend, borrow, and generate returns on their Bitcoin by doing so.
CBBTC (Coinbase Borrow Backed by Bitcoin) enhances security through its complete collateralization with Bitcoins stored securely in Coinbase vaults, a company that boasts a decade-long track record. The intention behind this is to increase the practicality for Bitcoin owners, enabling them to engage with decentralized finance platforms using their existing Bitcoin holdings.
How cbBTC works
When sending BTC from Coinbase to an address on Base or Ethereum, it will be automatically converted 1:1 to cbBTC. When receiving cbBTC in the Coinbase account, it will be converted 1:1 from cbBTC to BTC.
On Coinbase, you won’t find a dedicated order book or trading pair for CbBTC. Instead, you can trade it directly through the Coinbase Wallet on Decentralized Exchanges (DEXs). Additionally, it might be listed on other external platforms that decide to facilitate its trading.
As an analyst, I’m excited to announce that at its launch, cbBTC (Coinbase Bitcoin) will be operational for sending and receiving transactions within the U.S., excluding New York State, as well as in the UK, European Economic Area states, Singapore, Australia, and Brazil. Additionally, it will be globally accessible on both Base and Ethereum networks.
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2024-09-12 14:16