Coinbase has released cbBTC, a wrapped form of Bitcoin that gives users a new way to use their Bitcoin funds in decentralized finance (DeFi). People in the United States (except New York), the United Kingdom, Australia, Singapore, and other places can now use cbBTC. It was launched on the Ethereum network and Coinbase’s layer-2 scaling solution, Base.
cbBTC is a tokenized version of Bitcoin that is backed by Coinbase’s Bitcoin holdings. This makes sure that every cbBTC token sent to a Base or Ethereum address will immediately be worth the same amount of Bitcoin. In the same way, users can turn cbBTC back into Bitcoin by sending it to a Coinbase address.
Unlike regular Bitcoin transfers, cbBTC lets users use their Bitcoin in ways that aren’t possible on the original Bitcoin network to take advantage of DeFi possibilities. Users can now use Bitcoin as collateral for loans, to give DeFi systems cash, or to take part in a number of other DeFi apps. At launch, major DeFi systems like Aave, Compound, Morpho, and others will work with cbBTC. This will make Bitcoin more useful in the Ethereum environment.
Coinbase added cbBTC because wrapped Bitcoin products are becoming more popular. These products try to unlock Bitcoin’s promise in DeFi by getting around the problems with the original Bitcoin record. By turning Bitcoin into a token, Coinbase lets users take part in digital banking without having to do complicated cross-chain trades.
Coinbase also suggested that they might add more blockchain networks to cbBTC in the future, which would make the token even more useful and flexible. This is a big step forward for Coinbase in its efforts to get more people to use Bitcoin and make it more useful in the world of independent finance, which is always changing.
There are already wrapped Bitcoin goods on the market, like BitGo’s wrapped Bitcoin (WBTC), so Coinbase will have to deal with competition. However, cbBTC wants to stand out by integrating smoothly with Coinbase’s platform and giving users safe, reliable access to their Bitcoin funds in DeFi apps.
The addition of cbBTC opens up new opportunities for Bitcoin users. Coinbase is still working on its bigger goal to make Bitcoin more useful and open up private finance to more people.
