As a new investor in the cryptocurrency ecosystem, you may not be fully equipped with ideas on how to go about it. However, there are many cryptocurrencies on Alligat0r cryptocurrency exchange aggregator that you can invest in. Here, we guide you on how to trade WBTC- read on!
What is WBTC?
WBTC is also known as Wrapped Bitcoin. Wrapped Bitcoin was launched in January 2019. It is an ERC-20 crypto coin that is pegged to the price of Bitcoin on a ratio of 1:1. This implies that you can continuously convert your Bitcoin coins to the wrapped version and freely use them on Ethereum’s blockchain with a Bitcoin token.
Wrap Bitcoin has been made to incorporate the difference between Ethereum and Bitcoin blockchains. The project integrates smart contracts, prediction markets, decentralized exchanges, dApps (Decentralized applications) technologies, and Ethereum wallets to maintain its association with the Bitcoin protocols. In this manner, the owners of Bitcoin can get value for their assets on Ethereum through specified combinations.
How to trade WBTC?
To trade WBTC, you should put the following things into consideration:
Open an online account
You have to open an online account. Ensure you have a cryptocurrency that supports Wrapped Bitcoin, i.e., Ethereum or Bitcoin. If you have either of these, you can exchange them for WBTC.
Buy a crypto wallet
The buying and selling of these crypto tokens require you to have a wallet to store your assets, although buying it is optional. You can purchase a software or hardware wallet, depending on your preference. However, a hardware wallet is much secure since it stores your funds offline and on a physical device.
Make your purchase
After deciding where to store your Wrapped Bitcoin, you can purchase them. There are centralized exchanges such as eToro and Coinbase Pro where you can make your orders for WBTC as sell orders or limit orders. Market orders instantly buy your Wrapped Bitcoin at the available market price.
With WBTC, you can:
- Do margin trading other coins like Ethereum, thus generating more profits.
- You can earn interest by submitting your WBTC tokens to liquidity pools on borrowing and lending protocols. Through this, the tokens are utilized, and you earn some interest in the end.
- Through decentralized exchanges, yield farming earns you a passive income on WBTC.
Paybacks of Wrapped Bitcoin
- WBTC has better liquidity and increased capital efficiency for decentralized and centralized exchanges. This is because WBTC can move across multiple chains.
- WBTC transactions are faster and are offered at affordable prices which make it beneficial.
- Trading of WBTC tokens allows you access to fractionalized ownership, whereby you can purchase and hold a small fraction of the assets.
- Better utility- through this WBTC, the utility of Bitcoin can spread to Ethereum smart contract contracts.
When trading your WBTC tokens, you have to send your money back to the crypto exchange. You can choose to sell the tokens as a market or limit order and send your money back to the crypto wallet once the order has been filled. A decentralized exchange is a good alternative if you wish to exchange them for other ERC-20 coins or WBTC to AVAX.