tBTC allows bitcoin holders to use their assets to print tBTC tokens. And it is software that allows them to access decentralized finance (DeFi) applications on the Ethereum blockchain.
tBTC built as the first app on Keep Network. It acts as a bridge between Bitcoin and Ethereum, where Bitcoin holders can deposit their BTC funds into a smart contract and receive tBTC, an Ethereum token with the equivalent BTC value.
Each minted tBTC is backed 1:1 by the bitcoin cryptocurrency, which is held in a reserve and protected by the nodes that manage the signers, bitcoin deposits and redemptions.
Any node agrees to tie Ethereum’s cryptocurrency ETH as collateral. And so they can be signers, provided they make sure they act honestly. Of note, the signers are randomly selected by the protocol.
Using tBTC allows BTC holders to take advantage of Ethereum’s DeFi implementations, including returns, without the need to sell their bitcoins.
How Does Work?
To keep its network up and running, tBitcoin is in charge of managing BTC deposits and refunds. It relies on a group of users known as signers.
Nodes wishing to be signatories must deposit an amount of Ether worth 150% of the BTC deposited as collateral to ensure good behavior. Signers are then rewarded for their service with KEEP, the Keep Network’s native cryptocurrency.
In this way, tBTC signers are encouraged to act honestly and competently.
Signers are randomly selected from a pool of candidates via an encryption technique known as “signature at random”. And it works in groups of three.
To receive tBTC, users must send their bitcoins to a group of signers tasked with holding the deposited BTC. And once received, it can receive 1 tBTC for every 1 BTC sent to the group.
These transactions can be easily reversed when users want to exchange their tBTC for BTC.
tBTC is an application on Keep Network developed by software company Thesis, which previously created Keep Network.
The thesis was founded by Matt Luongo and Corbin Pon. Earlier, in 2014, they founded a company called Fold, which aims to allow users to spend bitcoin at major retailers and exchange old gift cards for bitcoin.
Users run their idle bitcoins. They may be interested in purchasing tBTC to gain access to yield generating tools built on Ethereum.
Investors may want to consider adding tBitcoin to their portfolio if they believe in decentralized solutions to convert BTC into Ethereum compatible tokens or if they want to hold BTC as an Ethereum token.