Wrapped Bitcoin by Kraken: A New Era or a Risky Bet?

In the world of crypto, everything started with Bitcoin, so I’m starting with Bitcoin as well. Especially since some interesting things are happening with it right now.

Did you know that Kraken is launching its own version of wrapped Bitcoin (kBTC)? It might not sound like a big deal, but Kraken isn’t the first major player recently showing interest in moving Bitcoin to different infrastructures, where it can be used in dApps, DAOs, and other DeFi applications.

Not long ago, Coinbase also announced plans to launch its own wrapped Bitcoin. Many developers are working on solutions that would allow Bitcoin to be used in complex smart contracts – from RGB to BitVM.

This is definitely a growing trend.

But I remember how a similar trend ended. When, in 2020-2021, everyone was heavily investing in decentralized finance, the funds slowly flowed from initial Bitcoin HODLers into large firms like 3AC and Alameda, which eventually went bankrupt in 2022. And the Bitcoins used as collateral in those funds didn’t help at all. They were tied up as security for investment positions that were liquidated.

Ordinary crypto enthusiasts who invested their real Bitcoin then ended up with nothing.

So giving up your Bitcoin in exchange for someone’s promises (whether it's kBTC or something else) is a risky path. It’s always better to hold real Bitcoin, not its wrapped versions.

And if you ever need to swap wrapped Bitcoin for native Bitcoin, you can always do it at Rabbit Swap.