Bitcoin BEP2 (BTCB) is a stablecoin launched by prominent cryptocurrency exchange Binance in June 2019. Backed by Bitcoin (BTC) reserves, BTCB is pegged to BTC’s price. In the following guide, we give you the lowdown on BTCB’s utility and key facts. What is BTCB and how do I get BTCB? Read on to find out.
What is BTCB?
So what is Bitcoin BEP2 used for? The Bitcoin BEP2 cryptocurrency acts as a bridge between the Bitcoin and Binance's blockchain architecture. Since BTC lives on its own chain, non-BEP2 coins could not be deployed on the Binance DEX and wider DeFi ecosystem. With the introduction of BTCB, the vast array of trading possibilities provided by the Binance platform became available to BTC holders.
Since Binance effectively retains ownership of users’ Bitcoin in a reserve, the method is highly centralised. Conversely, atomic swaps allow for holders of two cryptocurrencies living on different networks to trade with each other without the need of a centralised exchange. Exchange fees are also eliminated. While atomic swaps are aligned closer to cryptocurrency’s philosophy of decentralisation, Binance said: “Transparency is ensured through the Proof of Assets webpage, where you can verify the current supply for all locked and issued assets on the public blockchain.” Ease of use was cited as another benefit.
On the other hand,Bitcoin BEP2 (BTCB) provides the additional benefit of increasing engagement with its DeFi ecosystem, thus increasing trading volume and liquidity.
Is BTCB sufficiently backed?
A stable coin is only as secure as the reserves backing it. The world’s most popular stable coin Tether courts much controversy over its reserve claims; initially cited as being fully backed by the US dollar, the US Commodity Futures Trading Commission determined that this was a lie, issuing a $41m fine in October 2021. A deeper look into the controversy is available here.
Cross referencing the current balance of $4.959bn against Coin Market Cap’s market capitalisation statistics of $4.447bn, we can see that the reserves exceed requirements by more than $500m. Judging by these numbers, BTCB is sufficiently backed by BTC.
How popular is Bitcoin BEP2?
It is important to note that BTCB differs from the majority of other stablecoins out there, which are typically pegged to the US dollar as opposed to Bitcoin. BTCB and similar products are also referred to as “wrapped tokens”.
Although the term “stablecoin” more often than not refers to these fiat-pegged offerings, Bitcoin-pegged tokens are growing in popularity. Wrapped Bitcoin, the Ethereum-based project launched by the digital asset custodian BitGo and the two liquidity merchants Kyber and Ren, has a market capitalisation of $11.24bn and a recent 24-hour trading volume of $203.5m.
With a market capitalisation of $2.3bn, Wrapped BNB is pegged to the price of BNB, allowing for interoperability across the Binance Smart Chain ecosystem.
In comparison, BTCB’s market capitalisation stands at $4.4bn, with a recent 24-hour trading volume of $35.9m, making it one of the most popular wrapped token products. Although smaller than wBTC, it should be taken into account that Ethereum’s ecosystem of smart contracts is significantly larger than Binance’s.
Fiat-backed stablecoins are also constantly growing in popularity. Coin Market Cap states that the combined market capitalisation of all stablecoins in circulation is $166.6bn. A recent 24-hour trading volume was $80.54bn. In addition to Tether, by far the most popular stablecoin with a $78.4bn market capitalisation, other popular options include USD Coin at a $45bn market cap; Binance USD at $14.23bn; and TerraUSD at $10.6bn.
How secure is Bitcoin BEP2?
Bitcoin BEP2 cryptocurrency is secured through a proof-of-authority (PoA) consensus method, described by Binance as “a reputation-based consensus algorithm that introduces a practical and efficient solution for blockchain networks.”
PoA is more scalable than Bitcoin’s proof-of-work (PoW) mechanism, at the sacrifice of decentralisation. Typically, 21 active miners work to secure the Binance block chain at any one time.
What is BTCB and how do I get BTCB? Hope this article can provide you with a better understanding about this topic.
