Ethereum makes hostile takeover of bitcoin😉
Gives ethereum better security & makes bitcoin programable really is win win
Also unlike other stablecoins pegged to fiat currencies, WBTC tokens will feature a full proof-of-reserves verifiable directly on the two blockchains https://t.co/vUsqChDvrS
Quite different. This makes Bitcoin interactive with the Dapps, Smart contracts, on the ethereum network. Unlike Tether, which uses a shrouded black box of USD to back it (never been audited), WBTC is 1:1 BTC and verifiable onchain on the Bitcoin network and on the Ethereum network.
A custodian is necessary so it isn't double spent. Verification on both chains makes allows for full transparency, allows us to see that custodian is not malicious.
Or do you mean that you see a way for a decentralized custodian?
The idea is to make BTC and potentially other coins available natively for smart contract usage. A lot of applications on Ethereum, including decentralized exchanges, lending platforms and index funds will benefit greatly from having access to Bitcoin liquidity, which they currently don't.
You also just centralized Bitcoin. I am all for wrapping Bitcoin on Ethereum, it makes sense, I get it. Sending it through a centralized bridge in the name of profit is wrong and dangerous on so many levels.
Hey there! Yes, BitGo is the initial custodian, and Kyber and Republic Protocol are the initial merchants. But the WBTC initiative will be both led and governed by the community from the start through a Decentralized Autonomous Organization (DAO) comprised of reputable projects in the blockchain space. DAO members will publicly audit the WBTC tokens to make sure that the balances in the custodian wallet match the balances in the smart contract. Important decisions pertaining to the initiative, including the additions of new merchants and custodians will also be decided as a collective of trusted projects through the DAO, via a transparent voting process.
Also, the current iteration of WBTC is just the **first step** of the journey to an ideal decentralized solution, and it is very important for the community to work together towards a more innovative, interoperable ecosystem :)
I think that in order to synchronize two independent blockchains, you will need centralization at some level. It's not introducing anything new, Holding bitcoin on an exchange is that kind of centralization.
Atomic swaps are one thing, tokenization is another.
Atomic swaps let two individuals trade tokens across chains. Tokenization allows contracts much more leeway for dealing with currency. If Bitcoin is tokenized on Ethereum, smart contracts can use it in more complex trading scenarios, it can be used in collateralized lending systems, and probably other scenarios I can't imagine.
When dealing with tokenization some degree of centralization is unavoidable, as it's impossible for an Ethereum smart contract to sign a Bitcoin transaction, but the ideal for cross-chain tokenization would be that the BTC on the bitcoin blockchain gets released by an event in an Ethereum smart contract.
I generally think that WBTC has more centralization than strictly necessary, and I worry a bit that if WBTC is a "good enough" solution then it may be hard to get traction on a less centralized solution. But until Bitcoin adds features that would enable smart contracts to sign Bitcoin transactions, some level of centralization is going to be necessary to enable tokenization.
(It's worth noting that it's at least theoretically possible for different EVM chains to prove things to each other [see peace relay](https://github.com/KyberNetwork/peace-relay). So the idea that bitcoin could add such features are within the realm of technical possibility, but seem politically untenable.)
The goal isn't simply to be able to swap ERC20 tokens for Bitcoin, it's to be able to have a token on the Ethereum blockchain that is, for all intents and purposes, Bitcoin. Sure, if what you want to do is trade DAI for Bitcoin, you could do that with atomic swaps. If what you want to do is collateralize Bitcoin in a BZX loan, you can't do that with atomic swaps.
A contract can't be a party to an atomic swap. You could probably set up something pretty similar to an atomic swap that allowed someone to send BTC somewhere that would cause an ERC20 token to be minted, but the reverse of that is simply not possible. An Ethereum contract can't own Bitcoin and release it when you burn ERC20 tokens. If you believe otherwise, I'd love to see the theory behind it.
> The goal isn't simply to be able to swap ERC20 tokens for Bitcoin, it's to be able to have a token on the Ethereum blockchain that is, for all intents and purposes, Bitcoin. Sure, if what you want to do is trade DAI for Bitcoin, you could do that with atomic swaps.
Isn't that semantics? Whether you get the value of Bitcoin into an ERC20 token via a centralized bridge or through decentralized atomic swaps, you are netted with your "tokenized" ERC20 BTC on Ethereum, right? The best anyone can do is "tokenize" the value of Bitcoin on Ethereum - which we both agree might be beneficial for the entire ecosystem in general.
> If what you want to do is collateralize Bitcoin in a BZX loan, you can't do that with atomic swaps.
Why not? If you can "tokenize" Bitcoin in a centralized or decentralized way, what bearing does it have on its ability to be collateralized?
> A contract can't be a party to an atomic swap. You could probably set up something pretty similar to an atomic swap that allowed someone to send BTC somewhere that would cause an ERC20 token to be minted, but the reverse of that is simply not possible. An Ethereum contract can't own Bitcoin and release it when you burn ERC20 tokens. If you believe otherwise, I'd love to see the theory behind it.
Apologies if my previous explanation implied that the contracts are party to the swap, they can help to facilitate the swap. The way an atomic swap between Bitcoin and Ethereum works is with something called a 'pre-image'. This pre-image is a cryptographic lock which is the mechanism that propagates the transaction between the 2 parties. This *can* be done via smart contracts on the Ethereum side and Bitcoin script on the Bitcoin side. ( The mechanics of HTLC are explained better [here](https://bitcointalk.org/index.php?topic=193281.msg2224949#msg2224949) )
Since you can read and verify the transaction data on each chain, Party A on Ethereum, can sell it's tokenized ERC20 to Party B on BTC directly through swaps and vice-versa.
This is not theoretical, it is functioning in the wild with several bleeding edge projects.
Bitcoin on Ethereum can be decentralized end-to-end.
tizadxtr1 - 2 year account age. -15 - 35 comment karma.1 month ago
Trumps got bitcoins. It’s in his interest not to make it crash and burn. At least if it’s not in his name, he’s got some sitting in his family business accounts somewhere, ready for when he leaves office at the White House
Sounds like this would be a net negative for Ethereum? Rather than BTC holders convert their BTC to ETH (buying pressure for ETH and helping the ETH/BTC ratio) in order to use decentralized exchanges, people could just convert their BTC into WBTC and interact with the ethereum network and any ERC20 tokens. It seems like BTC would perhaps have been left behind if the entire crypto space moved further into the ethereum / erc20 world, but the creation of WBTC allows for BTC to hang around longer. If BTC hangs around longer, less likely that ETH becomes the top coin by market cap.
Can someone help me determine if this is a sound line of reasoning?
Yeah, it's an odd one. We had the same with all the ICO's last year. ETH's system is attractive in that it is a programmable currency and that in turn allowed ICO's to create tokens which people spent their ETH on. Those ICO's then took the ETH and converted it to fiat which took investment away from ETH. In a way, this is doing the same. So yes, it is giving Ethereum a lot of credibility but at a cost of it's trading value.
That dream still lives in ETH. Everyone says BTC is at least a “store of value.” But what that really means is a “store of fiat.” ETH on the other hand can be an even better store of value after Shasper (inflation drops to 0-1%, and vitalik contemplates a hard cap of either 120-140M). And this WBTC nonsense is proof that you can literally store and tokenize ANYTHING on Ethereum (debt, fiat, equity, stocks, real estate, art, even cryptocurrency). ETH is the original BTC dream on steroids.
I am a complete supporter of ETH but this nonsense about choosing sides is the same nonsense that polarizes politics. ETH will soon stop offering proof of work. There has to be at least one chain supported by proof of work to create value - proof of stake just stakes the value.
You can't have PoS ETH without PoW BTC... They are both necessary. Just as a chain that offers complete anonymity, monero is necessary and a centralized chain is necessary for banks, Ripple. They all have use cases. This isn't about choosing teams.
Does this help manage the transaction fees (in case transaction costs rise to $50+ like they did in December)
Does this help enable bitcoin to handle a higher number of transactions per second?
I know the Lightning Network also eliminates these problems...but it's good to have different solutions to the same problem. Properly fixing bitcoin scaling issues greatly increases the likelihood that bitcoin will continue to experience success in the future.
Small problem: I bet wBTC will not be compatible with the Lightning Network.
Feds will shut this down if they allow U.S. participation. Exchanges have to follow regulations. Trying an end around is frowned upon. More like FROWNED UPON. Anyone seen Kung Fu Hustle when, at the end, he uses the heavenly palm? It will be like that... EDIT: this needs a meme!
The same way the government shuts any business down. With an army of lawyers. Civil and criminal courts in states, and on the federal level. That being said, as long as they stay out of fiat and the custody accounts aren't in the US maybe it won't be a problem. I wouldn't count on it, but you never know.
The idea is to make BTC and potentially other coins (e.g. Litecoin) available natively for smart contract usages. A lot of applications on Ethereum, including decentralized exchanges, lending platforms and index funds will benefit greatly from having access to Bitcoin liquidity, which they currently don't. This [ETHNews article about WBTC](https://www.ethnews.com/bitcoin-backed-token-coming-to-ethereum) explained this point as well, “By bringing the WBTC token to the Ethereum platform, the consortium hopes to allow for the seamless use of bitcoin in all Ethereum applications such as ‘decentralized exchanges and financial protocols."
This is for people who want to speculate with their value in Bitcoin, but want to interact with the Ethereum ecosystem. If you do not believe in the price of Bitcoin, simply use ETH or DAI instead. By giving people choice, you increase the usefulness/utility of the Ethereum network as a whole.