In keeping with the ethos of defy, most cryptocurrencies try to take part in the Ethereum blockchain. But we all know that bitcoin is still the most famous cryptocurrency on the market. Those who seized the moment in 2009 and bought Bitcoin now are millionaires.
However, rising Defy shed light on the high level of boundaries and limitations in Bitcoin. Bitcoin holders want to participate in the decentralized finance ecosystem, but Bitcoin kept them in a loop. That is where RenBTC enter the scene. RenBTC is an ERC-20 token representing bitcoin on the Ethereum network.
It means that for every RenBTC, there is one Bitcoin. So if you are planning to participate in the decentralized finance industry and have heard about RenBTC, it is time to learn everything about it.
The history of RenBTC
The RenBTC is an ERC-20 token, and by definition, each RenBTC is equivalent to a BTC. Wrapped bitcoin and RenBTC are both projects with the same goal: to bring BTC to the world of Decentralized finance on the Ethereum network.
But RenBTC is not just a token; it is a product of a more extensive network called RenVM. So to understand Renbtc, it is better to understand RenVm first.
What is RenVm?
RenVM is an amazing protocol that creates ERC-20 tokens representing other cryptocurrencies on the Ethereum network. This protocol enables interoperability between different blockchains. Using this protocol, you can mint ERC-20 tokens, and the process is easy.
What is RenBTC?
RenBTC is an ERC-20 token that Bitcoin backs. You can mint RenBTC on the Ren platform. Ren Ease-in open platform did make access to the inter-blockchain liquidity easy. Ren is helpful for every asset to transfer from other blockchains to the Ethereum blockchain. Ren supports three leading cryptocurrencies, Bitcoin (BTC), Bitcoin Cash (BCH), and Zcash (ZEC) are the three cryptocurrencies Ren protocol support.
If you have been familiar with Wrapped Bitcoin, you should consider how RenBTC is competing with that. Read on to understand everything about this token before investing in it. Do we want to walk you through how does it work? How can you buy it? Where to buy it and why buy it? But let’s continue one step at a time. First, we need to know how one can mint RenBTC?
How to mint RenBTC?
Minting a token is like mining cryptocurrencies, but wait a minute. Does it mean that we have to spend more money and time than we have paid to earn bitcoin in the first place?
The answer is no. by mining bitcoin, you have come a long way, and now you can enjoy minting, which is a fun process. To understand the process, let’s consider a fictional character who wants to show us how you can mint RenBTC. Her name is Lola, and she is not a showgirl; she is a trader apparently because, let’s face it, we live in the 21st century.
First, Lola needs to send her BTC to a bitcoin address. But she needs to use an app compatible with the RenVM protocol. We have talked about RenVM above and its structure; now, let’s focus on Lola.
She finally finds the app and gets a unique Bitcoin address, and sends her BTCs to the address. She has to wait for 06 bitcoin confirmation to get a RenVM signature. Then it is time to mint RenBTC. Remember, you do not have to take these steps to mint a RenBTC. The UI will take care of the process.
How does RenBTC work?
The most crucial feature of RenBTC is locking and minting transactions. This whole process work as a cross-chain operation between bitcoin and Ethereum network.
This process produces a smart contract to transfer Bitcoin to the Ren protocol and mint RenBTC on the Ethereum. And the whole process is done without intermediaries. Everything begins once the user sends its BTC to the RenVM protocol. The protocol locks the BTC and mints the RenBTC.
How to redeem your bitcoin?
The process is as simple ad Minton RenBTC. To take your bitcoin back, you have to generate a burning transaction in RenVM. The RenBTC will burn, and your BTC will be released in the process.
The Founders of RenBTC
Taiyang Zhang is the CEO of the Ren platform. He was on the founding board of KeeperDAO and is a co-founder of Virgil Capital. Loong Wang, the academic Tutor at the Australian National University, is the CTO of the Ren. Three software developers, a researcher, a blockchain developer, and 30 more individuals working on the platform.
What is the difference between RenBTC and WBTC?
Wrapped Bitcoin and RenBTC seem to be quite similar. But they are different in many aspects. In WBTC, the user gives his bitcoin to a centralized custodian to be locked in a cold wallet and receive a 1:1 ERC-20 token on the Ethereum blockchain.
In general, the Renvm does the same process of locking BTC, minting RenBTC at the ratio of 1:1 on the Ethereum. However, the main difference is that the whole process is done for RenBTC much faster. There are other differences we will go through in the following:
- Interoperability and fluid
There are no centralized intermediaries in Ren protocol. And the process of storing and minting RenBTC can be done repeatedly.
- Trustless and Permissionless
The signature and ECDSA keys in the Ren platform are hidden from everyone. As the whole system is decentralized, no one can control or manipulate the process of storing, minting, burning or using your renbtc as you wish.
Pros and cons of RenBTC
The main advantages are as follows:
Flexibility makes it possible to transfer your token into any supported token on Ethereum.
A secure, private, and simple minting and burning process thanks to the Multi-party signature (MPC) system.
You can mint Renbtc faster than its counterpart Wrapped Bitcoin.
There is one disadvantage as well. As the Renbtc is an Erc-20 token, it is limited by the limitation of the Ethereum network. And one of the most important disadvantages of the Ethereum blockchain is its high transactional fees.