Wrapped Bitcoin (WBTC) is an ERC‑20 token on Ethereum backed 1:1 by Bitcoin held in reserve. It enables Bitcoin holders to use their assets in Ethereum’s decentralized finance applications. Bitcoin operates on its own blockchain and cannot execute the smart contracts required by Ethereum‑based DeFi protocols. This technical limitation prevents direct use of Bitcoin in lending, borrowing, or liquidity provision on Ethereum. The mint‑and‑burn process involves three participants. Custodians such as BitGo hold the underlying Bitcoin in secure reserve. Merchants, which may be exchanges or other crypto businesses, verify user identity and distribute the wrapped tokens. To create WBTC, a user requests the token from a merchant, the merchant verifies identity, and sends the corresponding Bitcoin to the custodian. The custodian mints an equal amount of WBTC on Ethereum and delivers it to the user. To redeem, a user submits a request, the WBTC is burned, and the custodian releases the equivalent Bitcoin. Both minting and burning are recorded on the Bitcoin and Ethereum blockchains. Periodic proof‑of‑reserve audits confirm that the backing exists. Governance is managed by a decentralized autonomous organization (DAO) composed of multiple stakeholders. Changes to custodians, merchants, or smart contracts require multi‑signature approval, distributing authority to reduce centralization risk. The DAO was tested in 2024 when BitGo announced a partnership that raised concerns about the new partner’s affiliations, prompting discussion about trust assumptions. A user who wants to earn interest can convert Bitcoin into WBTC. The user then deposits WBTC into a lending protocol on Ethereum to earn yield while retaining Bitcoin price exposure. Because Ethereum produces blocks more frequently than Bitcoin, WBTC transactions settle faster than native Bitcoin transactions. Other tokenized Bitcoin products include Coinbase’s cbBTC, which relies on Coinbase’s custody. tBTC, created by the Threshold Network, uses a more decentralized custody model. Selection among these options depends on the user’s preferred trust model and the DeFi platforms they intend to use. The primary risk is custodial centralization; if the custodian fails, is compromised, or becomes insolvent, the backing may be unavailable. Additional risks include smart contract vulnerabilities, bridge exposure when WBTC moves to layer‑two networks, contested governance decisions, and regulatory actions affecting redemption. Before converting Bitcoin to WBTC, users should verify which wrapped token they receive. They should confirm the custodian’s reserve attestations and review governance records. Understanding the redemption process helps mitigate the additional trust assumptions introduced by the wrapping mechanism. Wrapped Bitcoin allows Bitcoin holders to participate in Ethereum’s decentralized finance ecosystem. Its safety depends on the continued integrity of the custodians and the governance structure. Users must evaluate these factors in relation to their own risk tolerance.