I have read on twitter that WBTC has solved bitcoin scaling issues. Is it true? I want to know more about WBTC
Disclaimer: I worked at BitGo when WBTC was kicked off, but I didn't work on the WBTC project.
Wrapped Bitcoin (WBTC) is an ERC20 token fully backed by bitcoins held in BitGo's custody. BitGo mints new WBTC when bitcoins are deposited into custody and WBTC is burned when bitcoins are withdrawn from custody. WBTC is a means to get an IOU for hard money into the ETH ecosystem.
As a "scaling solution", it fits somewhere between a sidechain and payments between two user accounts on a custodial service:
- There is no "BTC on ETH", all bitcoins are held by BitGo (or other custodian if another gets added). WBTC is a promissory note for the assets held by BitGo.
- Payments using WBTC do not interact with the Bitcoin blockchain, they happen on the ETH network
- WBTC can be freely sent and received on ETH
- The WBTC token cannot be trustlessly redeemed for bitcoin, entering and exiting WBTC requires actions by BitGo
As ETH is still figuring out its monetary policy, the ETH ecosystem lacks a hard money. WBTC is frequently used to represent Bitcoin's value in the ETH ecosystem. Under the assumption that WBTC is a faithful representation of Bitcoin balances and since WBTC payments do not consume Bitcoin on-chain resources, one could consider them a scaling technique. Representing WBTC as "the scaling solution" for Bitcoin is a silly misrepresentation.
- WBTC does not scale Bitcoin
- Bitcoin has its own on-chain and off-chain scaling solutions
- You can read more it here: https://bitcoin.stackexchange.com/a/100177/
- WBTC refers to Wrapped Bitcoin (WBTC) and is an ERC20 token on other Chain which has nothing to do with Bitcoin or scaling Bitcoin.
- Bitgo is a custodian for WBTC: https://blog.bitgo.com/wrapped-btc-launches-with-bitgo-custody-and-full-proof-of-assets-c7fbf21e4a66
- You can lock bitcoin in multisig and issue any tokens on other chains to do fancy things which has tradeoffs and trust assumptions. This token will never be same as bitcoin and do not consider it as decentralized or censorship resistant or anything that solves bitcoin scaling issues.
- Last thing which non-technical users may find difficult to understand when they read "BTC on XYZ"
All BTC are on Bitcoin blockchain. Yes they are used in different projects and some of them issue their own tokens as well.