A few weeks ago, the American crypto exchange Coinbase created a buzz on X by simply posting “cbBTC” without any explanation, leaving many wondering what it could be. Today, the exchange clarified the tweet by announcing the launch of Coinbase Wrapped BTC (cbBTC), a new ERC20 token backed 1:1 by BTC currently available on Base and Ethereum networks.
Interacting with cbBTC
When users send bitcoin from Coinbase to a different network like Base or Ethereum, it is automatically exchanged for a matching amount of cbBTC. When they receive cbBTC in their exchange account, it is converted back into BTC.
Notably, cbBTC will not have its separate trading options on Coinbase. However, users can trade cbBTC on other decentralized platforms using Coinbase Wallet and other exchanges that may support it.
Starting September 12, customers can send and receive cbBTC in their Coinbase account. However, this is currently available for certain countries like the United States (except New York), the United Kingdom, and Australia. Being a DeFi product, it can be used anywhere in the world on Base and Ethereum networks.
Why Coinbase Launched cbBTC
The crypto exchange team noted that Coinbase created cbBTC to increase Bitcoin’s utility and onboard more users to crypto. By introducing cbBTC, the exchange enables millions of customers to access Ethereum’s financial apps using their existing Bitcoin holdings.
The largest U.S.-based exchange claims cbBTC is a trusted and reputable wrapped Bitcoin backed by the Coinbase BTC holdings. The innovation will link deep Bitcoin liquidity “to low-cost, high-speed financial rails on Base and Ethereum,” resulting in a more interconnected financial ecosystem.
The announcement added that cbBTC will remove friction, allowing users to tap into decentralized finance (DeFi) applications. The wrapped BTC product can perform on-chain tasks like providing liquidity and collateralizing to borrow other assets. Some popular DeFi apps are already supporting cbBTC, expanding Bitcoin’s on-chain utility.
As more people want to use Bitcoin in DeFi, Coinbase is filling the gap with cbBTC. With the help of major DeFi players, cbBTC could be a game-changer for the future of DeFi and blockchain technology.
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