Cardano Bitcoin (cBTC) enables the integration of Bitcoin into the ADA ecosystem.
Cardano Bitcoin (cBTC) is a chance to bring the world’s most popular cryptocurrency into the Cardano network. What are the benefits and drawbacks of the new token on the Charles Hoskinson-created blockchain and the related DeFi ecosystem?
The concept behind cBTC is not new; encapsulated BTC (wBTC) has been available on Ethereum since 2019. These tokens are “wrapped” prior to entering the Ethereum ecosystem, meaning they are blocked for use on the Bitcoin network and then released for use on the Ethereum network.
Other blockchains or crypto initiatives provide tokens for other cryptocurrencies that are similarly packaged. Wrapped tokens serve as an interface between two cryptocurrencies but provide a few additional features.
The wrapped BTC DAO (decentralized autonomous organization) is the custodian of all Ethereum-wrapped BTC. The DAO maintains a 1:1 ratio between bundled BTC and BTC. The DAO is decentralized and ever-changing.
To be sure, Bitcoin and decentralized finance (DeFi) should not necessitate third parties for digital asset transactions and custody. This is where Cardano BTC comes into action.
However, cBTC’s lack of a middleman makes DeFi enthusiasts’ pulses beat faster. Smart contracts and a vault (“safe”) are used to govern the BTC of users.
The first cBTC was created by AnetaBTC on March 5, 2023, and the app’s demo version was released on April 15. The application permitted users of Cardano to transmit Bitcoin to their ADA wallets.
