CoinDesk Podcast Network BITCOIN SEASON 2: What You Didn’t Know About Wrapped Bitcoin
Feb 15, 2025
Matt Luongo, Co-founder of Fold and a Bitcoin venture studio, dives into the complex world of wrapped Bitcoin. He explains what it means to wrap Bitcoin and the trust assumptions involved. The discussion addresses the differences among various wrapped Bitcoin products and the potential risks of using them. They also explore the significance of proof of reserves, the implications for corporate treasuries, and the future of Bitcoin's scaling. Luongo emphasizes the importance of understanding safety and functionality in this evolving ecosystem.
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Wrapped Bitcoin Definition
- "Wrapped Bitcoin" is a broad term, similar to how "Kleenex" is used for tissues.
- It refers to Bitcoin used on other blockchains via custodial or trust-minimized bridges.
Types of Wrapped Bitcoin
- Different methods exist for wrapping Bitcoin, including custodial bridging and Bitcoin held by corporations or in ETFs.
- These methods provide varying levels of control and accessibility for users.
Trust Assumptions in Wrapped Bitcoin
- Most wrapped Bitcoin relies on an "honest majority" assumption where security depends on the custodians' honesty.
- BitGo's WBTC, for example, initially relied on BitGo's custody, but its model changed over time.