Fun

Stop panicking about Wrapped Bitcoin — Mint Coinbase’s cbBTC instead

News Feed - 2024-10-01 11:10:34

Alex O’Donnell10 hours agoStop panicking about Wrapped Bitcoin — Mint Coinbase’s cbBTC insteadConcerns about wBTC’s planned custody shakeup are overblown. For added safety, cbBTC is the best alternative. 1003 Total views1 Total sharesListen to article 0:00OpinionOwn this piece of crypto historyCollect this article as NFTCOINTELEGRAPH IN YOUR SOCIAL FEEDFollow ourSubscribe onIf fear is contagious, then Wrapped Bitcoin’s (wBTC) custodian, BitGo, has started a pandemic.

In August, BitGo’s planned Bitcoin (BTC) custody overhaul sparked panic among wBTC holders. Now, similar fears are enveloping other Bitcoin wrappers. 


They are overblown. Your wBTC is still secure, and safer alternatives are proliferating. Among newly launched Bitcoin wrappers — tokens representing BTC on other blockchains — Coinbase Wrapped BTC (cbBTC) is the best bet. Flying too close to (Justin) Sun


On Aug. 9, BitGo tipped plans to grant partial control of wBTC’s Bitcoin backing to BiT Global, a Hong Kong crypto exchange. The partnership wasn’t well received. 


BiT Global has ties to Justin Sun, the controversial founder of the Tron smart contract platform. He’s been the subject of multiple misconduct allegations, including November fraud charges from United States regulators. Sun also reportedly tried to misappropriate customer funds from Poloniex, a crypto exchange he bought in 2021. 


Decentralized finance (DeFi) protocols have scrambled to cut wBTC exposure. On Sept. 19, Sky — previously Maker — voted to completely remove wBTC from its lending platform. 


Now, the contagion is spreading. In September, rumors circulated alleging Coinbase was issuing unbacked Bitcoin IOUs to BlackRock, a crypto exchange-traded fund (ETF) sponsor. That triggered yet another bout of wrapper worries, this time over the safety of Coinbase’s cbBTC.WBTC is the most popular wrapper token. Source: CoinGeckoOverblown anxieties 


The Coinbase rumors are unfounded — and thoroughly debunked — but the concerns about BitGo’s BiT Global partnership are valid. They still don’t justify abandoning wBTC. 


Sun clearly has BiT Global under his thumb. He may even own a controlling interest in the company, according to reports. However, Sun doesn’t manage the crypto exchange, and he won’t be directly administering wBTC. Even if he did, misappropriating wBTC’s Bitcoin backing would be virtually impossible. 


BitGo stores wBTC’s Bitcoin in a multisignature wallet, which requires at least two authorized “signers” to approve every BTC transfer. Only one of those signers will be BiT Global. The other two signatures will stay with BitGo’s United States and Singapore affiliates, respectively.


Recent:6 things the US needs to stay competitive in crypto, according to execs


BitGo publishes the addresses of every wBTC custodial wallet. As of Sept. 30, wBTC is backed 1:1 by approximately $10 billion worth of Bitcoin. 


The panic is finally subsiding. In September, BitGo pledged to notify wBTC holders 60 days in advance of any custody changes, including adding BiT Global as a signer. 


On Sept. 17, Sky halted plans to ditch wBTC after Block Analitica, a risk consultancy, said BitGo’s “additional details and clarity put us in a more comfortable position with the current state of WBTC operations and key management.”


On Sept. 26, wBTC’s total value locked (TVL) on Aave, a DeFi lending protocol, hit record highs of $2 billion, according to Dune Analytics. Block Analitica comments on wBTC. Source: SkyWrapper wars


The biggest threat to wBTC isn’t Sun — it’s competition from Coinbase’s upstart Bitcoin wrapper, cbBTC. 


Launched on Sept. 12, Coinbase’s cbBTC has already topped $250 million in TVL. Initially mintable on Ethereum and Base — Coinbase’s popular layer-2 scaling network — cbBTC will soon launch on Solana, according to a Sept. 20 post on X. cbBTC’s Bitcoin “shortfall” protections. Source: Coinbase


For anyone concerned about safe Bitcoin custody, Coinbase’s cbBTC is a clear winner. Its reserves are held by Coinbase Custody Trust, a New York chartered digital currency custodian. That means cbBTC is subject to the most stringent regulatory oversight in crypto. 


Stored in dedicated cold-storage wallets, cbBTC’s Bitcoin reserves are segregated from the exchange’s other assets and regularly audited by New York’s Department of Financial Services (NYDFS). They are even insured against cybersecurity risks. 


In fact, cbBTC explicitly commits to reimbursing holders for any Bitcoin reserves lost to exploits. It will be adding onchain proof-of-reserves soon. 


Coinbase’s cbBTC isn’t wBTC’s only challenger. In May, 21.co, the parent company of asset manager 21Shares, launched 21.co Wrapped Bitcoin (21BTC).


On Sept. 23, 21BTC added Chainlink proof-of-reserves, Web3’s gold standard for onchain reporting. That’s a good sign, but 21BTC still lacks cbBTC’s investor protections and oversight. 


Meanwhile, Threshold aims to establish tBTC as a decentralized alternative to custodial Bitcoin wrappers. The DeFi protocol — born from a merger of Keep and NuCypher — delegates tBTC mint-and-burn operations to a distributed network of validators. They are secured by Threshold’s native token, T.


Recent:Elon Musk’s X ban dispute with Brazil takes toll on local crypto community


It’s a work in progress. As of Sept. 30, tBTC is secured by 136 active nodes and some $84 million in staked collateral. At approximately $250 million, tBTC’s market capitalization is already high for Threshold’s modest economic security. 


Decentralized Bitcoin wrappers — including those on Bitcoin’s emerging layer-2 networks — might eventually dominate. For now, conventional investor protections are indispensable. That’s where Coinbase’s cbBTC shines. 


But, even after the BiT Global setback, it’s still wBTC’s race to lose.


This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.# Bitcoin# Coinbase# BitGo# Justin Sun# DeFiAdd reaction

News Feed

XRP rockets 26% as Ripple execs hail $125M penalty as ‘victory’
Ciaran Lyons7 hours agoXRP rockets 26% as Ripple execs hail $125M penalty as ‘victory’XRP’s price has surged 26% as the Ripple vs. SEC case appears to be nearing its final stages, with no signs suggesting XRP will
Li Rongbin, Founding Partner of SevenX Ventures, Explains Where the Metaverse and NFT Market Are Heading
Li Rongbin, Founding Partner of SevenX Ventures, Explains Where the Metaverse and NFT Market Are Heading SevenX Ventures is a community and research-driven blockchain investment fi
Microstrategy to Sell $600 Million Worth of Convertible Notes to Buy More Bitcoin
Microstrategy to Sell $600 Million Worth of Convertible Notes to Buy More Bitcoin The publicly listed company Microstrategy announced that it has plans to purcha
Spain Modifies Tax Model 720, Used to Declare Cryptocurrency Holdings Abroad
Spain Modifies Tax Model 720, Used to Declare Cryptocurrency Holdings Abroad The Spanish parliament has introduced an amendment to the tax model 720 used to declare cryptocurrency
Bitcoin, Ethereum Technical Analysis: ETH Back Under $2,000 as Balenciaga Gains Lose Steam
Bitcoin, Ethereum Technical Analysis: ETH Back Under $2,000 as Balenciaga Gains Lose Steam Following strong gains to start the week, BTC once again fell under $30,000, as crypto pr
Prosecutor demands jail for Crypto.com user who received $6.8M by mistake
Ciaran Lyons1 hour agoProsecutor demands jail for Crypto.com user who received $6.8M by mistakeAustralian prosecutors argue that imprisonment should remain a strong possibility for the Crypto.com user who received millio
Here Are Some Fun Things to Do With Bitcoin Cash
Here Are Some Fun Things to Do With Bitcoin Cash The best use for any currency would be to spend it on things you need or even better, enjoy. And spending has to be easy and inex
Savannah Fortis11 hours agoChina to build AI chip factory as global semiconductor race intensifiesChinese scientists are reportedly considering constructing massive facilities to manufacture the technology necessary to c
Shiba Inu Burn Rate Explodes 7,240% With 1.1 Billion Tokens Burned In 24 Hours, What’s Driving It?
Este artículo también está disponible en español. The Shiba Inu burn ratehas experienced a dramatic surge, exploding by an astonishing 7,240% in just one day. This massiv
Republican Congressman Tom Emmer Queries FDIC on Alleged Efforts to Purge Crypto Activity from US
Republican Congressman Tom Emmer Queries FDIC on Alleged Efforts to Purge Crypto Activity from US On Wednesday, Tom Emmer, the U.S. Republican congressman from Minnesota, revealed
FET Turning The Tide: Price Climbs Steady After A Rebound At $0.452
Reason to trust Strict editorial policy that focuses on accuracy, relevance, and impartiality Created by industry experts and meticulously reviewed The highest standards in reporting and pu
Blockchain.com Inks Multi-Year Deal With Dallas Cowboys Star Quarterback Dak Prescott
Blockchain.com Inks Multi-Year Deal With Dallas Cowboys Star Quarterback Dak Prescott The crypto firm Blockchain․com announced on Tuesday that the company has inked a multi-