What is a wrapped cryptocurrency?

By placing cryptocurrency in a special kind of digital vault, one can create what is called a wrapped token. The value of which depends on the stored Bitcoin, but the wrapped asset runs on a separate blockchain. For example, consider Wrapped Bitcoin ( WBTC -1.99%) and Bitcoin BEP-2 (CRYPTO: BTCB).

What are wrapped tokens?

One can lend out Wrapped Bitcoin or use them to provide trading liquidity in exchange for fixed income. Wrapped token holders can also reinvest their profits and benefit from compounding returns. You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

What is a wrapped bitcoin (WBTC)?

For example, consider Wrapped Bitcoin ( WBTC -1.99%) and Bitcoin BEP-2 (CRYPTO: BTCB). One can swap WBTC or BTCB for Bitcoin ( BTC -2.04%) directly on most wallets. And both are Bitcoins, but they don't operate on the Bitcoin blockchain. Instead, they transact on the Ethereum (ERC-20) and Binance (BEP-2) chains.

What are circulating coins?

Circulating coins are the coins that the United States Mint produces for everyday transactions. Circulating coins are also included in the United States Mint’s annual coin sets, which are the staple of coin collecting. Find measurements and metal content information on the Coin Specifications table.