WBTC, or Wrapped Bitcoin, is a token that represents Bitcoin on the Ethereum blockchain. One WBTC is backed 1:1 by Bitcoin held in reserve, ensuring that its value mirrors that of Bitcoin.The primary purpose of WBTC is to combine the liquidity and widespread acceptance of Bitcoin with the smart contract capabilities of the Ethereum network. This allows users to leverage Bitcoin in decentralized finance (DeFi) applications, such as lending, borrowing, and trading, all while maintaining exposure to Bitcoin’s value.To create WBTC, a user deposits Bitcoin with a custodian, who then mints an equivalent amount of WBTC on Ethereum. Conversely, users can redeem WBTC for Bitcoin through the same custodians. This process ensures transparency and trust, as the reserves are regularly audited, proving that every token is backed by real Bitcoin. As a result, WBTC provides a bridge between the two blockchains, enhancing utility and flexibility for users looking to participate in various financial services without selling their Bitcoin.