Since January, over $1.5 billion worth of bitcoin has been tokenized into ERC-20 tokens to use in the emerging decentralized finance (DeFi) ecosystem on Ethereum. These DeFi applications offer an increasingly large array of potential use cases for bitcoin investors looking for alternative ways to issue loans or make trades on new exchange platforms.
Tokenizing bitcoin serves as a bridge between these two leading cryptocurrency communities and an important step forward for traders and investors taking advantage of the features offered by both blockchains. Through tokenized bitcoin projects, the powerful monetary properties of bitcoin can be leveraged in the ever-growing collection of Ethereum-based cryptocurrency applications.
CoinDesk is preparing for the invest: ethereum economy virtual event on Oct. 14 with a special series of newsletters focused on Ethereum’s past, present and future. Every day until the event the team behind Blockchain Bites will dive into an aspect of Ethereum that excites or confuses us. Today’s intro is written by CoinDesk reporter Zack Voell.
Tokenized bitcoin also revives an age-old discussion on the merits of decentralization versus convenience. Some projects like Thesis’ tBTC project prioritizes decentralization while others, like the industry-leading wrapped bitcoin (WBTC) project by BitGo emphasizes convenience through a central custodian for all tokenized coins.
To date, seven different projects offer bitcoin tokenization services, and that list is likely to grow along with demand for more bitcoin-backed ERC-20 tokens. As the amount of tokenized bitcoin grows, the importance of each project’s security and reliability becomes even more important as does the continued development of Ethereum-based applications that pique the interest of tokenized bitcoin holders.
It’s a topic of conversation likely to be covered by CoinList and BitGo representatives when speaking on the virtual panel Unlocked: BTC on Eth: Having Your…