Coinbase Promotes cbBTC — Wrapped Bitcoin for Blockchain Base
Date: 2024-08-14 Author: Henry Casey Categories: BLOCKCHAIN
Cryptocurrency exchange Coinbase, judging by recent social media posts and posts by Jesse Pollack, the creator of the Base blockchain, is developing an alternative to BitGo's popular wrapped bitcoin wBTC. The new product, called cbBTC, is designed to be used on the second-layer Base blockchain and promises to open access to bitcoin on this platform.
The speculation arose after Coinbase posted cryptic messages on its X social media account (formerly Twitter), where "cbBTC" was mentioned and a promise of its imminent launch. These posts caused a wave of discussions in the crypto community, especially after Pollack confirmed the team's intentions to develop a "large-scale bitcoin economy" on the Base platform.
Wrapped cryptocurrencies like wBTC are a way to migrate assets to other blockchains, increasing liquidity in new ecosystems. In the case of wrapped bitcoin, each cbBTC token will represent one bitcoin stored in a special account. When a user wants to exchange cbBTC for the original bitcoin, the token will be “burned” and the original cryptocurrency will be returned to the owner.
The launch of cbBTC comes amid uncertainty surrounding BitGo’s wBTC. BitGo recently announced a joint venture with Hong Kong-based BiT Global, a platform partially owned by the Tron ecosystem and its founder Justin Sun. Despite this, the technology and storage of assets will remain unchanged, as evidenced by the data on the blockchain.
However, this announcement has caused mixed reactions among crypto community members. For example, concerns about the risk associated with using wBTC have been expressed on the forums of MakerDAO, the developer of the DAI stablecoin. It has been suggested that the borrowing limits against wBTC be reduced to zero to reduce potential risks. However, data from Dune shows that the supply of wBTC has not changed, indicating that there is no mass exit from the protocol.
In his post on X, Justin Sun assured that no changes are planned to wBTC, except for the creation of a joint venture. He also emphasized that he does not have control over the private keys of the protocol and cannot move bitcoin reserves.
Thus, Coinbase is making a major step in the development of the bitcoin economy on the Base platform, offering users a new tool for working with cryptocurrency on the second-layer blockchain. In the near future, it will become clear how this will affect the market and user reaction.
