Coinbase has introduced a new product: “Coinbase Wrapped Bitcoin” (cbBTC), an ERC-20 token is fully backed by Bitcoin at a 1:1 ratio.
The exchange claims that the new product is targeted at enhancing Bitcoin’s utility within the DeFi ecosystem.
“As the oldest and most widely held crypto asset, Bitcoin plays an essential role in onboarding users to crypto,”
Coinbase stated in a recent press release.
“Starting today, millions of Coinbase customers can seamlessly and securely access financial apps within the Ethereum ecosystem using the Bitcoin they already hold.”
According to the exchange, the introduction of cbBTC represents another step in its efforts to increase Bitcoin’s utility, following its integration of the Lightning Network for instant, low-cost payments. It revealed that wrapped token allows users to leverage their Bitcoin on dApps across both Ethereum and Coinbase’s Layer-2 blockchain, Base.
Coinbase emphasized that each cbBTC token is backed 1:1 by Bitcoin held by the exchange, and thus, its value preservation and full redeemability for Bitcoin is guaranteed. Users can convert between BTC and cbBTC seamlessly without concerns over value discrepancies.
The launch of cbBTC follows speculations a month ago, fueled by cryptic posts on the crypto exchange’s official X account and comments from Jesse Pollak, head of its Layer 2 network Base, about building a “massive Bitcoin economy” on the platform.
Coinbase also noted plans to expand cbBTC’s availability to other blockchains in the near future, further enhancing its utility.
This development aligns with CEO Brian Armstrong’s optimistic vision for cryptocurrency’s future, as recently shared in a Wall Street Journal interview. Despite current regulatory uncertainties, Armstrong said that he anticipates a significant portion of global GDP operating on crypto rails. He claimed that cryptocurrency would usher in a future where the global financial system is more efficient, fair, and accessible.
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