What You Need to Know About Wrapped Bitcoin

Photo by André François McKenzie on Unsplash

When you start to invest in cryptocurrencies, you want to understand the blockchain, which contains every crypto transaction ever made in a decentralized format. That means the information doesn’t only exist in one place on the blockchain — the movement is recorded simultaneously in all blockchain locations. The blockchain is essentially a database spanned over multiple locations and computers, similar to a network you might see a company use in an office with several locations.

That system makes for not only an eternal and unchangeable record but a secure transaction because if someone alters one record, it won’t match all the other records and will stick out like a sore thumb. But there’s a catch. Each cryptocurrency exists and trades on a specific blockchain, which also houses its own ecosystem and features. That’s fine if you only want to invest in Bitcoin (BTC) or Ethereum (ETH) on their respective blockchains, but what if you want to take your Bitcoin investment and hop over to another blockchain and explore?

Wrapping and Unwrapping to Explore

To take advantage of features available on the Ethereum blockchain, you can convert your Bitcoin to Wrapped Bitcoin (WBTC). Exchanging Bitcoin for Wrapped Bitcoin allows you to integrate the cryptocurrency into the Ethereum space and access the features Ethereum’s blockchain provides. That includes unique wallets, Dapps, games, smart contracts and decentralized finance (DeFi) lending, which can help you earn interest on your cryptocurrency investment without selling your Bitcoin.

Explore a company like Hodlnaut to support your new WBTC on its platform. In fact, Hodlnaut, an innovative financial services platform, just announced its support for WBTC with its token swap feature, where you could earn 6% on your WBTC holdings, which accrues every day and compounds each week.

The company even offers a way to swap Bitcoin for WBTC at a clean price and no additional fees. That way, you don’t have to use a middleman, and you’re free to take advantage of the features that only exist on the Ethereum blockchain network.

Here are some advantages to wrapping your Bitcoin:

Cryptocurrencies Going Forward

With cryptocurrency popularity on the rise, you might consider adding some coins to your portfolio and diversify your holdings, but why should you tie yourself to one blockchain? Keep in mind that wrapping Bitcoin is relatively new, and you want to make sure you use a trusted company like Hodlnaut to help protect your assets.

Although the technology for wrapping is strong, the platform you use is important because you don’t want the exchange to unlock your real Bitcoin tokens and give you fake WBTC. So, while you need to use caution and choose wisely in the new market of WBTC, the concept opens the door to a new way for cryptocurrency HODLers to keep their crypto while earning rewards in the process.

See more from Benzinga

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.