Wrapped bitcoin is a token on another blockchain that represents BTC held in custody, not bitcoin itself
WBTC is a version of Bitcoin that lives on smart contract chains such as Ethereum. It is not the original asset on the Bitcoin blockchain (ethereum.org). WBTC states that every token is backed 1:1 by bitcoin in custody, minted when BTC is deposited and burned when it is redeemed. Using it means trusting the custodian and the smart contracts behind it.
A token on one blockchain that represents an asset from another. Its value depends on the original asset held in reserve, so holders rely on whoever keeps that reserve.
Is WBTC the same as BTC?
BTC
- The native asset of the Bitcoin network.
- Held with your own keys, on Bitcoin.
- No custodian between you and the coin.
WBTC
- A token on Ethereum and other smart contract chains.
- Backed 1:1 by BTC in custody, as WBTC states.
- Can be used in DeFi apps that do not run on Bitcoin.
- 1:1backing WBTC states for every token, with on-chain proof of reserveswbtc.network
- 25+blockchains WBTC says it is available onwbtc.network
- 2019year WBTC launched, by BitGo, Kyber Network and Republic Protocolkraken.com
How is WBTC minted and redeemed?
- Deposit
BTC is deposited through an authorized merchant.
- Verify and mint
An authorized custodian verifies the deposit and WBTC is minted on the destination chain.
- Use
WBTC moves like any other token on that chain.
- Redeem and burn
WBTC is redeemed through a merchant and burned, and the custodian releases the equivalent BTC.
Only identity-verified institutions approved through DAO governance can mint and burn WBTC.
The system relies on three parties: custodians, merchants and a DAO that controls smart contract changes and membership (Kraken Learn).
BitGo and BiT Global announced a joint venture for multi-institution custody of WBTC.
What is the difference between WBTC and cbBTC?
- WBTC: minted and burned through authorized merchants, with BTC held by custodians and a DAO governing the contracts.
- cbBTC (Coinbase Wrapped BTC): backed 1:1 by native BTC held by Coinbase, minted when a user withdraws BTC from Coinbase to Ethereum or Base, and redeemable by depositing it back into a Coinbase account.
Both represent BTC on other chains. Neither is BTC on the Bitcoin network.
Is WBTC safe?
Wrapped means risk-free.
Bridges and wrapped assets carry smart contract risk: one flaw in a contract can expose the assets (ethereum.org).
No one needs to be trusted.
Trusted designs carry counterparty risk, because users rely on the third parties who hold the funds (ethereum.org).
A wrapped token is as good as the original anywhere.
Wrapped versions of tokens have been exploited, which adds systemic risk (ethereum.org).
How do I convert WBTC back to BTC?
Two routes exist. Redemption through an authorized merchant burns WBTC and releases BTC, but minting and burning are limited to approved institutions.
For most people, the practical route is a swap: send WBTC, receive native BTC at a Bitcoin address.
On an instant swap service that is one cross-chain order. SimpleSwap folds cross-chain routing into the standard swap flow, and ChangeNOW also ships a standalone bridge.
Make sure the receiving address is a Bitcoin address, not an Ethereum one. More in Cross-chain swaps and bridges.
Questions
What is wrapped Bitcoin (WBTC)?
WBTC is a token on Ethereum and other smart contract chains that represents bitcoin. WBTC states that every token is backed 1:1 by BTC held in custody.
Is WBTC the same as BTC?
No. BTC is the native asset of the Bitcoin network. WBTC is a separate token on other chains whose value depends on the BTC held in custody.
Is WBTC safe?
It carries smart contract risk and counterparty risk: you rely on the contracts and on the custodian holding the reserve.
What is the difference between WBTC and cbBTC?
WBTC is minted through authorized merchants with BTC held by custodians and a DAO governing changes. cbBTC is backed by BTC held by Coinbase and minted when users withdraw BTC from Coinbase to Ethereum or Base.
How do I convert WBTC back to BTC?
Minting and redemption are limited to approved institutions, so most users swap WBTC for BTC and receive it at a Bitcoin address.
Who holds the Bitcoin behind WBTC?
Authorized custodians. BitGo and BiT Global announced a joint venture for multi-institution custody of WBTC.