There’s always a new term or trend flying around in crypto. Since it’s our goal to be the kindergarten of crypto, you can trust us to explain it to you in the easiest way possible. So what’s the new rave in town? It’s cbBTC
Now, cbBTC is a form of wrapped Bitcoin proposed by Coinbase. What are wrapped Bitcoins (WBTC)? Wrapped Bitcoin is a version of Bitcoin that’s compatible with Ethereum’s blockchain. It’s like a digital cover that allows Bitcoin to be used in Ethereum-based apps.
So, Coinbase, the second-biggest crypto exchange, recently talked about releasing its own wrapped Bitcoin called cbBTC. There’s a lot of excitement about this. And some people think this could even be a huge win for DeFi and investors at large.
What’s the background?
Coinbase sold the idea of cbBTC in a tweet it shared on X on August 13. The exchange posted a ticker of the new cbBTC, along with the message “coming soon.” Jesse Pollak, who runs Base, also shared a post about Base’s plans to build a strong Bitcoin economy on Base.
So, Coinbase is taking advantage of the drama around wrapped Bitcoin to launch its version. Wrapped Bitcoin is currently in muddy waters over its planned restructure. BitGo, the company behind WBTC, plans to transfer control of WBTC to a joint venture with BiT Global and Justin Sun.
Sun is the guy behind Tron, and to most people, he is controversial. BitGo’s restructuring plans aren’t liked by the crypto community. For one, it involves moving the custody of the Bitcoin underlying WBTC outside the U.S. Also, some people are concerned about the lack of transparency in this new venture.
MakerDAO, one of the top DeFi platforms, is also considering whether to stop new DAI minting backed by WBTC in its Maker and SparkLend protocols. This means lots of instability for WBTC. We’ve seen other Sun-associated projects, like TrueUSD, get into trouble. That means the uncertainty around WBTC leaves room for Coinbase’s new cbBTC token. It could emerge as a better alternative for people interested in wrapped Bitcoin.
Why’s this a big deal for DeFi and crypto?
Coinbase’s cbBTC has already sparked massive excitement in crypto. Although there are no details yet, you can tell that it’s going to be massive. By expanding its tokenized asset offerings, Coinbase could reshape how we think about wrapped Bitcoin, especially as demand for tokenized Bitcoin on Ethereum-compatible chains continues to grow. And with its ownership of the Base layer 2 chain, onboarding people into DeFi will be easier than ever before.
Think about it: Coinbase already made waves with cbETH, a wrapped Ethereum token that launched in August 2022. With around 210,000 cbETH in circulation, it’s been a hit. So, if cbBTC follows in cbETH’s footsteps, we could see a major shift in the market.
Lots of crypto executives and thought leaders have positive expectations for cbBTC. Anndy Lian, a blockchain expert, believes cbBTC could offer a more transparent alternative to WBTC. Rena Shah, COO of Trust Machines, sees cbBTC as a huge opportunity for Bitcoin DeFi (BTCFi).
Shah believes that Coinbase’s massive user base alone could bring a significant number of new users to Bitcoin DeFi. And with recent interest in BTCFi, especially after the launch of the Runes protocol, the timing couldn’t be better.
Disclaimer
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