What it is
Wrapped Bitcoin (WBTC) is a tokenized version of Bitcoin that operates on the Ethereum blockchain, adhering to the ERC-20 standard. Each WBTC is backed 1:1 by actual Bitcoin held in reserves by custodians. This "wrapping" process enables Bitcoin holders to participate in Ethereum's decentralized finance (DeFi) applications, such as lending, borrowing, and decentralized exchanges, without needing to sell their Bitcoin and buy Ethereum-native assets.
WBTC is significant because it bridges the two largest cryptocurrency ecosystems, allowing Bitcoin's liquidity to flow into Ethereum's DeFi space. News often covers WBTC's role in total value locked (TVL) metrics within DeFi protocols, indicating its adoption and impact. The process involves a merchant and a custodian: the merchant locks Bitcoin with the custodian, who then mints an equivalent amount of WBTC on Ethereum. The reverse process "unwraps" WBTC back to Bitcoin.
Why it matters
WBTC allows retail investors to use their Bitcoin in Ethereum's DeFi ecosystem, opening up new yield opportunities and access to various decentralized applications.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice