Tokenized Bitcoin on Ethereum

What is Tokenized Bitcoin?

First, we should figure out a few things so as not to cause confusion. If you have read our What is Bitcoin? In this article, you will know that the uppercase b of Bitcoin represents the network, and the lowercase b represents the unit of account .

The idea behind tokenized Bitcoin is relatively simple. You lock BTC through some mechanism, mint tokens on another network , and use BTC as a token on that network. Each token on the other network represents a specific amount of bitcoin. The two should always be linked and this process should be reversible. That is, you can burn these tokens, thereby unlocking the “original” bitcoins again on the bitcoin blockchain.

In the case of Ethereum , this refers to the ERC-20 token genrator that represents Bitcoin . This allows users to conduct transactions on the Bitcoin-denominated Ethereum network. This also makes it possible to program Bitcoin like any other token on Ethereum.

You can view the current total amount of tokenized Bitcoin on Ethereum at btconethereum.com .

As of July 2020, there are approximately 15,000 tokenized BTC on Ethereum. That sounds like a huge number, but it pales in comparison to the roughly 18.5 million that make up circulation . However, this may just be the beginning.

Notably, sidechains and layer 2 solutions such as Bitcoin’s Lightning Network or Liquid Network are designed to address similar challenges. Intriguingly, Bitcoin on Ethereum is more than ten times as large as Bitcoin on the Bitcoin Lightning Network.

Even so, the competition between these different solutions is not that simple, and it is not a zero-sum game. In fact, many believe they complement each other rather than compete with each other. Tokenized projects can enrich options for Bitcoin holders, while token-free projects can improve the overall infrastructure. This could lead to more consolidation within the space, benefiting the industry as a whole.

So it all sounds interesting, but what’s the point? Let’s explore why Bitcoin was tokenized in the first place.

Why Tokenize Bitcoin on Ethereum?

Bitcoin’s design intent is simple. By design, Bitcoin has a lot of features and performs well. However, these properties have some inherent limitations.

Bitcoin captures most of its value and does not benefit significantly from innovations in other areas of the digital currency industry. While technically you can execute smart contracts on Bitcoin , the scope is quite limited compared to Ethereum or other smart contract platforms .

Tokenizing Bitcoin on other chains can increase the utility of the network. In what way? It enables features that Bitcoin does not natively support. At the same time, the core functions and security model of Bitcoin remain unchanged. There may be some other advantages such as increased transaction speed, homogeneity and privacy.

Here’s another potential reason. One of the most outstanding aspects of DeFi is the idea of ​​composability. This means that since all of these applications are running on the same open source , non-licensed common base layer, they can work together smoothly with each other.

Many see the introduction of Bitcoin into this layer of composable financial building blocks as an exciting prospect. It could lead to many new types of applications using Bitcoin that would not otherwise be possible.

How does tokenized Bitcoin work?

There are many ways to tokenize Bitcoin on Ethereum and other blockchains . They all have varying degrees of decentralization, make different assumptions about trust and risk , and may maintain pegs in different ways.

The two main types can be defined as managed and unmanaged. The first type involves a centralized custodian, and tokens may also be minted by that party. This introduces counterparty risk, as the entity hosting the Bitcoin must be trusted (and must remain in business). On the other hand, this implementation might be considered more secure than the alternative.

Other solutions are slightly different. No trusted entity is required, as the entire minting and burning process is performed by an automated on-chain process . Collateral assets are locked and tokens are minted on another chain through some on-chain mechanism. These funds are locked on-chain until they are unlocked again when the tokens are destroyed. This eliminates counterparty risk while increasing potential security risks. Why? In this case, the burden of risk is entirely borne by the user. If funds are lost due to user or contract errors, these funds may be lost forever.

Paradigm of Tokenized Bitcoin

hosting

These make up a huge percentage of the current tokenized bitcoin supply. Most of the value locked is in Wrapped Bitcoin (WBTC). How does it work? Users transfer their bitcoins to a centralized custodian who stores them in a multi-signature cold storage wallet and mints WBTC tokens in return. It is worth noting that this process requires proof of their identity to comply with Know Your Customer (KYC) / Anti- Money Laundering (AML) regulations. This approach requires trust in the entity that is minting the token, but also brings some security advantages.

Binance also has a tokenized version of BTC called BTCB . This is the BEP-20 token issued on Binance Chain . erc20 token development If you want to try it out, you can trade it on Binance DEX .

Unmanaged

The non-custodial solution runs entirely on-chain and requires no transaction from a centralized custodian. In short, you can think of them as similar to Wrapped BTC. However, this is not a centralized custodian, but a smart contract or virtual machine that secures funds and mints tokens. Users can deposit BTC and mint their tokenized bitcoins in a trustless and permissionless manner .

Some of these systems also require over-collateralization, which means that users must deposit more than the value ( collateral ) they plan to mint. They do this to prepare the system for black swan effects and large market crashes . Even so, these systems may not be able to handle a significant drop in collateral value. create erc20 token


 

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Tokenized Bitcoin on Ethereum
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Basic {#basic}

What is Ethereum? {#what-is-ethereum}

Bitcoin 2.0? a world computer? a smart contracts platform?

Papers {#papers}

If you feel like going to the source

Roadmap {#roadmap}

  • Timeline - Expected timeline - Post from Mars 2015.
    • Olympic - 0: Olympic.
    • Frontier - 1: Frontier.
    • Homestead - 2: Homestead <----- HERE WE ARE.
    • Metropolis - 3: Metropolis - "when we finally officially release a relatively full-featured user interface for non-technical users of Ethereum"
    • Serenity - 4: Serenity - Switching the network from Proof of Work to Proof of Stake ( Casper). end of 2016?.

Branding / Logo {#branding}

Crowfunding {#crowfunding}

Remembering a time where the price of Ether was 2000 ETH per BTC

Foundation {#foundation}

The Ethereum Foundation’s mission is to promote and support research, development and education to bring decentralized protocols and tools to the world that empower developers to produce next generation decentralized applications (DAPPs), and together build a more globally accessible, more free and more trustworthy Internet.

  • Website - The Ethereum foundation Page.

Clients {#clients}

Implementations of the Ethereum protocol.

The Ethereum network {#network}

Network Stat {#network-stats}

Need information about a block, a current difficulty, the network hashrate?

  • Ethstats - See latest data of the Ethereum Network.

Blockhain Explorer {#blockchain-explorer}

Mainnet

Testnet

Ether {#ether}

Ether is the name of the currency used within Ethereum

Info {#ether-info}

SPOILER: There are about 77 million ethers in existence and every new block (an average of 15 seconds) creates 5 new ether.

Exchanges {#exchanges}

Where you can trade ethers - Remember: if you don't control the private you don't really control the ethers

Faucets {#faucets}

Free Ether? don't have big expectation :)

Mainnet

Testnet

Wallets {#wallets}

To store your ethers

  • Mist - Mist - Official wallet with integrated full node.
  • Jaxx - By KryptoKit, Wallets that unify the Bitcoin and Ethereum experience accross Devices.
  • Myetherwallet - Open Source JavaScript Client-Side Ether Wallet.
  • Icebox - Lightwallet-powered cold storage solution..

Mining {#mining}

let's make the network work! and earn some ethers!

How to {#mining-hoe-to}

Mining pools {#mining-pools}

Fell alone? join a pool

Smart Contract languages {#smart-contracts-languages}

Solidity

Solidity, the JavaScript-like language

Serpent

Serpent, the Python-like language

LLL

LLL, the Lisp-like languagee

DAPP {#dapp}

Tutorials {#tutorials}

IDE {#ide}

Others awesome things & concepts {#others}

Casper {#casper}

  • Casper - Casper - Proof of Work (PoW) for Serenity.
  • Research - ethereum/research

Whisper {#whisper}

an upcoming P2P messaging protocol that will be integrated into the EtherBrowser.

  • Whisper Wiki Wiki article about Whisper ( December 2014)-
  • Whisper ? - What is Whisper and what is it used for?.

Swarm {#swarm}

  • Swarm - Swarm for Storage .

web3-j {#web3-j}

Ethereum compatible JavaScript API which implements the Generic JSON RPC spec.

Gas {#gas}

Gas is the fundamental network cost unit and is paid for exclusively in ether.

  • Gas Doc - Gas and transaction costs from the Ethereum Documentation.
  • What is Gas? - What is the “Gas” in Ethereum? -Post from CryptoCompare.
  • Cost calculator - Calculate the cost of conducting a transaction or executing a contract on Ethereum.

Projects using Ethereum {#projects}

Big ones

  • Augur - Prediction Market.
  • Slock.it - Rent, sell or share anything - without middlemen.
  • Digix - Transparent asset tracking of LBMA GOLD with blockchain technology 2.0.

Lists of projects

Companies {#companies}

Community {#community}

Social {#social}

Skype {#skype}

Main Skype Channels

  • Ethereum - Ethereum: the main channel, bridged to IRC #ethereum.
  • Ethereum-dev - Ethereum-dev: the developer's channel, bridged to IRC #ethereum-dev.

Speciality Skype Channels

Regional Skype Channels

  • London - London General: London-based Etherians.
  • Italia - Italia: Italian Etherians.
  • Romania - Romania: Romanian Etherians.
  • Russia - Russia - Russian Etherians (Russian language).

Gitter channels

IRC channels (Freenode)

  • Go-Ethereum -
    • #ethereum: for general discussion
    • #ethereum-dev: for development specific questions and discussions
    • ##ethereum: for offtopic and banter
    • #ethereum-mining: for mining only conversations
    • #ethereum-markets: for discussions about markets

Meetups {#meetups}

Events {#events}

Devcon

Stay up to date! {#up-to-date}

Newsletter {#newsletter}

Podcast {#podcast}

Contributing

Your contributions are always welcome! Please take a look at the contribution guidelines first.

I would keep some pull requests open if I'm not sure whether the content are awesome, you could vote for them by leaving a comment that contains +1.

To be added

  • Jobs
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Download details:

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Source code: https://github.com/lampGit/awesome-ethereum

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The origin of the article: https://www.youtube.com/watch?v=F_qkF_gSzv4
🔺 DISCLAIMER: The article is for information sharing. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Not investment advice or legal advice.
Cryptocurrency trading is VERY risky. Make sure you understand these risks and that you are responsible for what you do with your money
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📺 The video in this post was made by BitBoy Crypto
The origin of the article: https://www.youtube.com/watch?v=1I62ylKb4ss
🔺 DISCLAIMER: The article is for information sharing. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Not investment advice or legal advice.
Cryptocurrency trading is VERY risky. Make sure you understand these risks and that you are responsible for what you do with your money
🔥 If you’re a beginner. I believe the article below will be useful to you ☞ What You Should Know Before Investing in Cryptocurrency - For Beginner
⭐ ⭐ ⭐The project is of interest to the community. Join to Get free ‘GEEK coin’ (GEEKCASH coin)!
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