Bitcoin Association Switzerland (BAS), together with the involved companies, has announced yet another way to use Bitcoin: tzBTC, a token on the Tezos blockchain backed 1-1 by Bitcoin.
Today, we are announcing #tzBTC, a tokenized Bitcoin for the Tezos blockchain. #Tezos #Bitcoin
Check out our blog post to learn more!https://t.co/5SsoJO6rJJ pic.twitter.com/NSxyTG4MrL
— Bitcoin Association Switzerland (@bitcoin_ch) April 8, 2020
A “wrapped” token refers to the blockchain-based tokenization of a physical asset such as a fiat currency (US dollar) or commodity (gold), or another digital asset such as bitcoin (BTC) or ether (ETH). Wrapped tokens are controlled and custodied in a process that is combined with the increase (minting) and/or decrease (burning) of its circulating supply to ensure parity with the underlying asset.
In the case of tzBTC, the tokenized asset is Bitcoin (BTC), wrapped in a smart contract called tzBTC on the Tezos blockchain. One tzBTC represents one BTC, parity that is ensured by a group of Keyholders and an independent third-party auditor. In short, the value of tzBTC aims to represent the value of BTC.
tzBTC allows users and applications on Tezos to directly transact in BTC on the Tezos blockchain, bringing BTC’s liquidity and brand to the Tezos ecosystem and enabling novel financial use-cases on-chain.
“Our goal with tzTBC is to make bitcoin even more accessible and flexible, strengthening its position as the leading currency,” Lucas Betschart, president of Bitcoin Association Switzerland.
The tzBTC system has two parties – the aforementioned Keyholders and Gatekeepers. Keyholders are custodians and include token issuer Swiss Crypto Tokens, Blockchain services firm Inacta, custody infrastructure firm Taurus and crypto legal services firm LEXR.
Gatekeepers, on the other hand, accept Bitcoin from users and allocate tzBTC in return. These include crypto financial services firm Bitcoin Suisse, crypto bank Sygnum, crypto market maker Woorton, crypto exchange Bity and Taurus.
The multi-signature (“multi-sig”) key management system of tzBTC enables a strongly trust-reduced setup with no central issuer as a single point of failure, while being fully transparent. The Bitcoin Association Switzerland acts as an overseer and coordinates with the Keyholders.
“Taking the largest cryptocurrency and connecting it to the Tezos blockchain is like bringing the railroad to the gold mine – it allows for transportability and opens up possibilities for use,” said Armin Schmid, CEO of Swiss Crypto Tokens.
“We believe very much in the benefits of decentralization and it’s great to be a part of this decentralized community effort to connect the bitcoin ecosystem with the growing Tezos community and all the possibilities of the Tezos blockchain,” Schmid added.
The launch of tzBTC is one of the first examples of tokenization and DeFi (decentralized finance) on Tezos. Blockchains gives ability to expressively encode financial permissioning and governance rules in a publicly transparent way. In the future, BAS hopes to explore more novel mechanisms for governing, using, and transacting in wrapped assets on the Tezos blockchain.
For a more detailed overview tzBTC, check out tzbtc.io.