A tokenized version of Bitcoin that exists on the Ethereum blockchain. Each WBTC is backed 1:1 by actual Bitcoin held in reserve, meaning its value mirrors the price of Bitcoin while allowing it to function within the Ethereum ecosystem. The creation of WBTC bridges two of the largest cryptocurrency networks: Bitcoin and Ethereum. While Bitcoin was designed primarily as a decentralized digital currency, Ethereum provides a programmable platform for building decentralized applications. WBTC enables the use of Bitcoin’s value in Ethereum-based applications, unlocking additional utility without requiring the sale of BTC.
How WBTC Works
When a user wants to obtain WBTC, a custodian locks the equivalent amount of Bitcoin in reserve and issues an equal number of WBTC tokens on Ethereum. The reverse process, burning WBTC to redeem BTC, is also possible. This custodial structure ensures that an equal amount of Bitcoin backs every WBTC in circulation, verified through transparent audits.
Benefits of WBTC
- Accessibility: Holders of Bitcoin can participate in Ethereum-based financial ecosystems without needing to convert their Bitcoin to Ether or other assets.
- Liquidity: WBTC helps bring the significant liquidity of Bitcoin into environments where it would otherwise be difficult to use directly.
- Interoperability: It acts as a bridge between two major blockchain communities, expanding use cases for Bitcoin beyond simple holding or transactions.
- Transparency: Custodians publish proof of reserves, so users can confirm that circulating WBTC is fully backed.
Custodial Structure
BitGo Holdings, Inc. is a digital asset infrastructure and financial services company headquartered in Sioux Falls, South Dakota. BitGo secures approximately 20% of all on-chain Bitcoin transactions by value and is the largest independent digital asset custodian, with over $100 billion in digital assets on its platform. BitGo is a Fortune 500 company ranked 273rd in 2026. The company offers a multisignature bitcoin wallet service, where keys are divided among several owners to manage risk. Generally, BitGo wallets have three keys: one held by BitGo, and two held by the wallet's owner. Wallets can be configured in both hot and cold configurations, as well as non-custodial and custodial configurations. BitGo serves as the sole custodian for bitcoin that people deposit to receive a tokenized form of that bitcoin known as Wrapped Bitcoin (WBTC) that can be exchanged on the Ethereum blockchain.