Coinbase Teases cbBTC: A Wrapped Bitcoin Alternative for Base Blockchain
Recent tweets from Coinbase and Jesse Pollak, the creator of Base, have sparked speculation about the development of cbBTC, a new wrapped Bitcoin designed to operate on the layer-2 Base blockchain. The posts hinted at Coinbase’s intention to provide users with an alternative to BitGo’s wBTC, allowing access to Bitcoin on the Base network.
What is cbBTC?
While details are scarce, Coinbase’s cryptic posts on X, formerly known as Twitter, late Tuesday night included the terms “cbBTC” and “Coming soon.” This was followed by Jesse Pollak’s post, where he mentioned plans to build a “massive bitcoin economy” on the Base network. This has led to widespread speculation that Coinbase is developing a wrapped Bitcoin token similar to BitGo’s wBTC, which could bring increased liquidity to the Base blockchain.
The Concept of Wrapped Bitcoin
Wrapping a cryptocurrency like Bitcoin allows it to be used on blockchain protocols other than the one it was originally designed for. Each wrapped Bitcoin token represents one Bitcoin, which is securely held in custody. When a user wishes to redeem their wrapped Bitcoin for the original Bitcoin, the wrapped token is burned, and the original Bitcoin is released.
BitGo’s wBTC and Its Challenges
Coinbase’s announcement comes at a time when BitGo’s wBTC is under scrutiny. Earlier this month, BitGo announced a joint venture with BiT Global, a Hong Kong-based custody platform partially owned by the Tron ecosystem and its founder, Justin Sun. The venture will continue using BitGo’s multisignature technology and deep cold storage, but the news has generated mixed reactions.
- Despite no technical changes to the wBTC protocol, some members of the MakerDAO community have expressed concerns. A proposal has been made to stop wBTC borrowing and reduce wBTC debt limits to zero DAI to mitigate risk.
- On-chain data from Dune shows no significant changes in wBTC supply, indicating that traders are not exiting the protocol en masse.
- Justin Sun has clarified in a post on X that there will be “no changes to WBTC” outside of the joint venture and emphasized that he does not control the protocol’s private keys or Bitcoin reserves.
Sun further added, “My personal involvement in WBTC is entirely strategic,” addressing concerns about his influence on the protocol.
Looking Ahead
As the crypto community awaits more details on cbBTC, it’s clear that Coinbase’s potential entry into the wrapped Bitcoin market could have significant implications for the Base blockchain. Whether cbBTC can rival BitGo’s wBTC remains to be seen, but the anticipation is building as Coinbase prepares to unveil its plans.
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