After announcing it in August, cryptocurrency exchange Coinbase launched its cbBTC on Thursday. How does this new wrapped version of Bitcoin (BTC) work?
Coinbase launches its cbBTC
Announced a few weeks ago now, Coinbase's cbBTC Now Launched. Indeed, the company began rolling out this packaged version of Bitcoin (BTC) as early as Thursday:
cbBTC is onchain.
cbBTC is an ERC20 token that is backed 1:1 by Bitcoin (BTC) held by Coinbase.
This means millions of BTC holders can now securely access DeFi apps on @base and Ethereum ecosystems—with more chains coming soon.
Here's what you need to know ↓ pic.twitter.com/nF8mF3JGms
— Coinbase 🛡️ (@coinbase) September 12, 2024
At the moment, cbBTC is active on 2 networks, namely Ethereum (ETH) and Base, with 991 and 729 BTC of liquidity respectively at the time of writing. According to Coinbase, other blockchains will be supported in the future:
This is just the beginning. By integrating Bitcoin on Base and Ethereum, Coinbase is excited to drive innovative financial applications and broader adoption of Bitcoin in DeFi. We are also working to expand native support for cbBTC to additional chains.
💡 How to buy Coinbase shares on the stock market?
On the decentralized finance (DeFi) side, several ecosystem protocols have already added cbBTC to their catalog, including major protocols such as Uniswap, Aave and Compound.
Coinbase: Sign up for the world's most reputable crypto exchange
How cbBTC works
From a technical point of view, this wrapped version of BTC is collateralized at a 1:1 ratio by bitcoins held by Coinbaseand the conversion is done automatically when withdrawing to a supported network:
When users send their BTC from Coinbase to Base or Ethereum, they will be automatically converted 1:1 to cbBTC. When users receive cbBTC into their Coinbase accounts, they will be converted 1:1 from cbBTC to BTC. Notably, cbBTC will not have a separate order book or trading pair on Coinbase.
👉 Also in the news — UK: Government unveils bill to clarify legal status of cryptocurrencies
Coinbase shares rose 2.7% to $162.89 in Thursday trading, and the company is now valued at $40.47 billion.
For its part, BTC has slightly fallen by 0.37% in 24 hours and is trading at a price of $57,859.
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Source: Coinbase
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Since 2021, I have devoted my free time to seriously training myself on cryptocurrencies in order to acquire as much knowledge and credibility as possible. I often have the opportunity to conduct interviews with influential figures in the blockchain industry. I also conduct in-depth analyses on Web3 themes to offer exclusive content to Cryptoast readers.
Vincent Maire
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