Coinbase has introduced Coinbase Wrapped BTC (cbBTC), an ERC-20 token backed 1:1 by Bitcoin securely stored by Coinbase.
The goal of cbBTC is to enhance Bitcoin’s utility by enabling its use in decentralized finance (DeFi) applications on Ethereum. Initially, cbBTC will be available on both Base and Ethereum, with plans to expand to other networks later.
Designed to be a trusted and secure version of Bitcoin, cbBTC is backed by Coinbase’s reliable storage infrastructure, which holds large amounts of Bitcoin for customers worldwide.
Wrapped cryptocurrency refers to a tokenized version of a cryptocurrency that operates on a different blockchain while maintaining the same value as the original asset. This process addresses interoperability issues between blockchains, allowing assets from one blockchain to be used on another.
Bitcoin (BTC) operates exclusively within its own blockchain. By wrapping BTC, users can convert it into Wrapped Bitcoin (WBTC), an ERC20 token compatible with the Ethereum blockchain.
The original Bitcoin is held in reserve by a custodian, ensuring each WBTC token is backed 1:1 by Bitcoin.
Wrapped tokens allow users to engage in decentralized finance (DeFi) applications and services that are not available on the original blockchain.
This results in greater liquidity and flexibility, enabling users to leverage wrapped assets in various DeFi protocols, such as lending or trading, without selling their original cryptocurrencies.
With cbBTC, users can participate in DeFi activities like lending their Bitcoin to DeFi platforms or using it as collateral to borrow other cryptocurrencies. Coinbase has stated that DeFi platforms such as Aerodrome, Curve, Matcha, Uniswap, Aave, Compound, Morpho, Moonwell, Spark, Mellow, Veda, DeBridge, DeFinitive, Chronicle Labs, Block Analitica, Gauntlet, Steakhouse, and Maple will support cbBTC from its launch.
Coinbase also mentioned that at launch, users can send and receive cbBTC on Coinbase in the US (except New York), the UK, countries in the EEA, Singapore, Australia, and Brazil. Additionally, it will be available globally on the Base and Ethereum networks with these smart contract addresses:
Base: 0xcbb7c0000ab88b473b1f5afd9ef808440eed33bf
Ethereum: 0xcbb7c0000ab88b473b1f5afd9ef808440eed33bf
Roughly a month back, Coinbase revealed its plans for cbBTC on Ethereum layer two, known as Base. Fast forward two weeks and Coinbase’s CEO announced their inaugural AI-to-AI crypto transaction on this platform.
Armstrong emphasized in an article on X that while AI agents may not acquire bank accounts, they can secure crypto wallets. With Base and USDC, these AIs can now engage in transactions with individuals, businesses, or fellow AIs. The perks? These transactions are instant, global, and free.
