Kraken Launches Its Own Wrapped Bitcoin (kBTC) on Ethereum

[yhiaali3]

Crypto exchange Kraken has joined the race for dominance in the realm of Wrapped Bitcoins, unveiling its own Ethereum-based token, kBTC.

The landscape of Wrapped Bitcoins is becoming more crowded as U.S.-based crypto exchange Kraken has introduced its own Wrapped Bitcoin, just a month after its rival Coinbase made the same step.
In a blog announcement on Thursday, Oct. 17, the San Francisco-based trading platform said the “kBTC” token is built on the Ethereum network, and “fully backed 1:1 by an equivalent amount of Bitcoin” held in Kraken Financial, a Wyoming-chartered depository institution. Kraken emphasized that “clients can verify this for themselves at any time by inspecting our reserves on-chain,” underscoring its commitment to transparency among competitors.

https://coinmarketcap.com/community/articles/671107d511a559140af6e3ca/

As the news says, the Wrapped Bitcoins scene is actually getting more crowded just a month after its competitor Coinbase did the same thing and also released its own wrapped Bitcoin cbBTC and we also had WBTC a long time ago. Now Kraken joins the list.

I really don’t get this nonsense, do we really need this? I don’t know why exchanges are racing to release their wrapped Bitcoin when they know it’s worthless?

[joniboini]

I don’t know why exchanges are racing to release their wrapped Bitcoin when they know it’s worthless?

I think the obvious answer is that they believe there is a market for it. I mean this is just another way for them to hoard more BTC because if we believe their word for it, each token is backed by Bitcoin. Anyone who wants to print new tokens would need to deposit their BTC to Kraken, just like how other wrapped tokens. I think Kraken doesn't want to miss the train which is why they launched their own wrapped Bitcoin. If you don't think you'll use this, probably means you're not their target (me too). At the end of the day, if they burn money and fail to get any profits they will kill this.

[yhiaali3]

I don’t know why exchanges are racing to release their wrapped Bitcoin when they know it’s worthless?

I think the obvious answer is that they believe there is a market for it. I mean this is just another way for them to hoard more BTC because if we believe their word for it, each token is backed by Bitcoin. Anyone who wants to print new tokens would need to deposit their BTC to Kraken, just like how other wrapped tokens. I think Kraken doesn't want to miss the train which is why they launched their own wrapped Bitcoin. If you don't think you'll use this, probably means you're not their target (me too). At the end of the day, if they burn money and fail to get any profits they will kill this.

But as far as I know, the exchanges are the ones that mint wrapped bitcoins and claim that each token is backed by real bitcoins, so they (the exchanges) have to provide real bitcoin backing, not the users.

Here lies the danger if there is no real bitcoin backing and users buy wrapped bitcoins, it means they are actually buying garbage, the exchanges can mint as much wrapped bitcoin as they want and no one can prove that they have real bitcoin backing.

[hugeblack]

The good news is that there is more liquidity flowing into the so-called decentralized economy represented by DEXs and bridges.


The bad news is that these services are centralized and not decentralized as they claim, and their fees are higher and their risks are greater.


I did not expect companies like Kraken to join the hype, but it seems that profits are what drives the market.

[ABCbits]

Does anyone keep count of wrapped Bitcoin either on ETH or all altcoin? Besides, i don't see anyone would use kBTC aside from Kraken itself and some active Kraken customer.

[MrSpasybo]

Does anyone keep count of wrapped Bitcoin either on ETH or all altcoin? Besides, i don't see anyone would use kBTC aside from Kraken itself and some active Kraken customer.

I think we can mention WBTC, CBBTC, renBTC, pBTC, WRBTC, teleBTC... Among them, WBTC is the most well-known, but I've never owned or used it.

kBTC is a product aimed at Kraken users. It could be a tool for Kraken to incentivize users to stay on their platform rather than exploring other CEXs in the market. I hope Kraken will see positive impacts from this new product, gaining more users and revenue to combat the SEC in the future.

[Crypto Library]

But as far as I know, the exchanges are the ones that mint wrapped bitcoins and claim that each token is backed by real bitcoins, so they (the exchanges) have to provide real bitcoin backing, not the users.

Here lies the danger if there is no real bitcoin backing and users buy wrapped bitcoins, it means they are actually buying garbage, the exchanges can mint as much wrapped bitcoin as they want and no one can prove that they have real bitcoin backing.

Hearing your words reminded me of FTX Ekchanger. I hope many of us have not forgotten it. FTX exchanger authorities said that they have kept over 10 billion dollars as reserve backing, I don't remember the exact amount. Although they said that they had reserved backing on 10 billion dollars, but basically they had reserves of around 3 billion dollars. And later when Binance announced that they were withdrawing their investment in FTX and as an impact users had to withdraw their funds as a result the FTX exchanger crash and they declared themselves bankruptcy.

[yhiaali3]

Hearing your words reminded me of FTX Ekchanger. I hope many of us have not forgotten it. FTX exchanger authorities said that they have kept over 10 billion dollars as reserve backing, I don't remember the exact amount. Although they said that they had reserved backing on 10 billion dollars, but basically they had reserves of around 3 billion dollars. And later when Binance announced that they were withdrawing their investment in FTX and as an impact users had to withdraw their funds as a result the FTX exchanger crash and they declared themselves bankruptcy.

Yes indeed this can happen if a lot of naive users buy large amounts of kBTC and Kraken mints more of these tokens without having a real BTC backing, what will happen if users demand to sell or withdraw all their tokens? If Kraken does not have a real BTC backing or they do not have enough reserves we will get another FTX.

[Crypto Library]

Yes indeed this can happen if a lot of naive users buy large amounts of kBTC and Kraken mints more of these tokens without having a real BTC backing, what will happen if users demand to sell or withdraw all their tokens? If Kraken does not have a real BTC backing or they do not have enough reserves we will get another FTX.

Now if we analyze most of the exchangers do not have any clear information about their proof of reserve, and that is the main reason to avoid one of the exchangers for holding their own funds. So there is no guarantee that what you said will not happen and therefore we should not believe in anything other than real bitcoin.

Do you remember? FTX exchanger run their ads on almost all the most expensive advertising sites in the world. And they have never shown clear evidence of their proof of reserved. As a result, it has been seen that they have carried out such a huge campaign with customers funds. And finally, when people started selling their coins they crashed due to no reserve money. And in the case of Kraken, there is no guarantee that this will not happen again.

[TomPluz]

I really don’t get this nonsense, do we really need this? I don’t know why exchanges are racing to release their wrapped Bitcoin when they know it’s worthless?

You are not alone wondering if this is really so necessary...but maybe there must be some behind-the-scenes reasons for Kraken introducing its own wrapped Bitcoin to its own platform. Are they making good money with that? Why not just use the real, unwrapped Bitcoin in the first place...is it to take advantage of Ethereum while still in Bitcoin? I am hoping somebody here can illuminate my mind on this question. Anyway, since Christmas is coming soon...hope someone can send me some wrapped Bitcoin to my wallet...that would be so appreciated. 

[yhiaali3]

Are they making good money with that? Why not just use the real, unwrapped Bitcoin in the first place...is it to take advantage of Ethereum while still in Bitcoin? I am hoping somebody here can illuminate my mind on this question.

They can't use real Bitcoin on Ethereum so they mint wrapped Bitcoin tokens on Ethereum (these tokens are supposed to be backed by real Bitcoin 1:1).

I don't understand why Bitcoin is needed on Ethereum? The only thing I can think of is that these tokens are primarily for profit because they have no real use, through fees and by printing as many as they want.

[joniboini]

I don't understand why Bitcoin is needed on Ethereum? The only thing I can think of is that these tokens are primarily for profit because they have no real use, through fees and by printing as many as they want.

As far as I know, most platforms seem to suggest that wrapped token allows them to make more money out of their Bitcoin through staking, liquidity pool participation, lending activity, etc compared to hoarding them in their wallet. The trade-off is very big though, since you give up the ownership of your coins on top of the risk you mentioned above. Unfortunately, it seems like there is a demand for it judging from how many wrapped tokens are out there. Can't help but feel that the fact that a lot of users view Bitcoin as an instrument of investment also contributed to this. CMIIW.

[Jating]

I don't understand why Bitcoin is needed on Ethereum? The only thing I can think of is that these tokens are primarily for profit because they have no real use, through fees and by printing as many as they want.

As far as I know, most platforms seem to suggest that wrapped token allows them to make more money out of their Bitcoin through staking, liquidity pool participation, lending activity, etc compared to hoarding them in their wallet. The trade-off is very big though, since you give up the ownership of your coins on top of the risk you mentioned above. Unfortunately, it seems like there is a demand for it judging from how many wrapped tokens are out there. Can't help but feel that the fact that a lot of users view Bitcoin as an instrument of investment also contributed to this. CMIIW.

Yes, it's all business for them, making more money is the intention why they have a race for this so called Wrapped BTC. Of course there is a demand that's why this exchanges are trying to outdo each other.

This is similar to the trend in 2018 started by Binance to have their native token, and after that, a lot of top tier exchange follow suit but there was only one success story and that is BNB. Could be the same here, the first one to have this kind of crypto will win in the end.

[yhiaali3]

This is similar to the trend in 2018 started by Binance to have their native token, and after that, a lot of top tier exchange follow suit but there was only one success story and that is BNB. Could be the same here, the first one to have this kind of crypto will win in the end.

There is no problem with exchanges having their own tokens like Binance did and all exchanges followed suit as you mentioned, these are their own tokens and they can control them and use them in their exchanges and fees etc, that's okay.

But Bitcoin is something else, no one has the right to tamper with Bitcoin and create a fake coin and claim that it is equivalent to Bitcoin, this is a fake coin because it is centralized and the exchange has full control over it where it can mint as much of it as it wants and it is also able to freeze users' tokens in their wallets or prevent them from using them, this is nothing like Bitcoin.