Bitcoin News Today – Headlines for October 2

Bitcoin Trading
  • Wrapped Bitcoin custodian BitGo adopts Chainlink’s Proof of Reserve Mechanism
  • Tokenized Bitcoin on Ethereum is on the rise
  • Wrapped Bitcoin Accounts for the Majority of Tokenized Bitcoin for use on Ethereum

Bitcoin News Today – wrapped Bitcoin (wBTC) is now safer with Chainlink oracles checking custody wallets every 10 minutes. BitGo – wrapped Bitcoin custodian – has adopted the Proof of Reserve mechanism of Chainlink to boost the auditability and transparency of the tokenized asset of DeFi protocols.

BitGo Adopts Chainlink’s Proof of Reserve Mechanism to Bypass Manual Off-Chain Processes

This functionality is already live on testnet, and it would allow Ethereum-based DApps to fully automate the burden of auditing wrapped Bitcoin. This move comes as the amount of wBTC on Ethereum reaches $1 billion in value, which is more than 92,500 BTC. The mechanism refutes the need to depend on manual off-chain processes such as audit reports.

It streamlines the process in a censorship-resistant and trustless manner that gives more security and credibility to the tokenized version of Bitcoin. BitGo announced the collaboration with Chainlink on October 1. The firm said this means DeFi apps could now receive definitive on-chain proof about the completely backed collateralization of wrapped Bitcoin.

Bitcoin (BTC) Price Today – BTC / USD

NamePrice24H %
bitcoin
Bitcoin(BTC)
$0.00-0.15%

The Proof of Reserve contract would access a decentralized Chainlink oracle to query the balances of BitGo custody wallets for wrapped Bitcoin every ten minutes, and 10 minutes is the average time between Bitcoin blocks. If any change is noticed from the set threshold, the oracle will push an update on-chain to reference the new balance. Chainlink nodes would keep track of the contract off-chain and only update it on-chain when events change the balance like the burning or minting of wrapped Bitcoin.

Wrapped Bitcoin Accounts for the Majority of Tokenized Bitcoin for use on Ethereum

The new mechanism would also protect user funds, as a money market can check the collateralization of wBTC before executing a borrowing or lending action. A snippet of the announcement states:

“This feature can be especially beneficial for decentralized applications that utilize wBTC as collateral to secure other digital assets.”

Sergey Nazarov – Chainlink protocol co-founder – also said:

“I think the concept of Proof of Reserve generally is really about proving that an underlying asset somewhere is in a certain state. And that proof is actually very fundamental to how financial systems work.”

In its native form, Bitcoin does not work well with DeFi, which is largely Ethereum based. Tokenizing Bitcoin in the form of ERC20, or wrapping it, has become very popular this year as yield farming opportunities have surfaced almost every day.

Data from btconethereum.com shows that there is presently 12,300 Bitcoin, worth about $1.33 billion, tokenized for use on Ethereum. That value increased by more than 970 percent over the past three months and wrapped Bitcoin accounts for 76 percent of it.

Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.

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