Coinbase, the top US crypto exchange, has rolled out Coinbase Wrapped Bitcoin (cbBTC). It's a 1:1 Bitcoin-backed token on Ethereum. The move has set the crypto world abuzz.
cbBTC aims to bridge Bitcoin with decentralized finance (DeFi). It's now live on Ethereum and Base blockchains. Users can access popular DeFi apps like Aave and Curve Finance.
Coinbase's blog post explains the perks. "cbBTC removes a key point of friction," it states. Users can now provide Bitcoin as liquidity or use it as collateral in DeFi.
The conversion process seems straightforward. When users send BTC from Coinbase to Base or Ethereum, it automatically becomes cbBTC. The reverse happens when cbBTC lands in Coinbase accounts.
But not everyone's thrilled. Justin Sun, Tron's founder, is leading the pushback. He called it a "dark day for BTC" on Twitter. Sun's beef? He claims cbBTC lacks proof of reserve and audits. Sun didn't stop there. He warned that a single US subpoena could freeze all associated Bitcoin. "Essentially, it's just, 'Trust me,'" he mocked.
The criticism isn't coming out of thin air. Recent drama around Wrapped Bitcoin (WBTC) has made folks wary. WBTC's custodian, BitGo, recently partnered with a Sun-affiliated company. It raised eyebrows about centralization.
Amid the fuss, other players are jumping in. Investment firm 21shares announced its own wrapped Bitcoin, 21BTC. It's getting crowded out there.
Some industry experts are chiming in.
Fireblocks' VP, Arik Galansky, told Decrypt that WBTC hasn't kept pace with tech evolution. He thinks the market needs better alternatives.
Vijay Pravin Maharajan from bitsCrunch pointed out the risks. He's worried about centralization and smart contract vulnerabilities. It's not all sunshine and rainbows in the wrapped Bitcoin world.
Coinbase isn't taking the criticism lying down. They told Decrypt they're keeping tight control of the keys. No lending or funny business with the backing Bitcoin, they promise. Hours after launch, Coinbase had to issue a warning. Scammers were already trying to impersonate cbBTC. It's a jungle out there, folks.
The debate rages on. Is cbBTC a game-changer or a ticking time bomb? Only time will tell. But one thing's for sure – the crypto world is never dull.