Cryptocurrency exchange Kraken has launched a new product that allows Bitcoin to operate on the Ethereum network. This 'wrapped' Bitcoin token, named KBTC, helps Bitcoin holders gain access to decentralized finance applications on the Ethereum platform.
What is KBTC and How Does It Work?
KBTC is a token released by Kraken, backed one-to-one by Bitcoin. It represents Bitcoin that has been made available for use in Ethereum network applications. Thus, one KBTC trades at the equivalent of one Bitcoin, allowing users to participate in Ethereum-based DeFi applications without needing to sell their Bitcoin directly.
Differences Between wBTC and KBTC
KBTC functions similarly to the previously released wBTC. Launched in 2019 within the Ethereum ecosystem, wBTC is also one-to-one backed by Bitcoin. However, the fact that KBTC is offered directly by Kraken provides a distinct advantage for its users. KBTC offers faster transaction confirmations on the Ethereum network compared to Bitcoin, which is a significant advantage. While transactions on the Ethereum network occur in about 15 seconds, the confirmation time on the Bitcoin network takes around 10 minutes.
Significance of Kraken's New Product
Kraken’s move aims to bridge the technical gap between Bitcoin and Ethereum networks, facilitating interaction between the two blockchain systems. As a result, users can utilize their assets on the Ethereum network without the constraints previously faced by Bitcoin holders.
Kraken's innovation eases access to decentralized finance services for Bitcoin holders and fosters interaction between different blockchains.