What is RenBTC And How Does it Work?
Blockchain technology has made it possible to do a lot of things that were unimaginable a decade ago. RenBTC is one of the projects that brought real-life practicality to the blockchain not just because it brought the Bitcoin token to Ethereum, it did more by enabling features of Ethereum in an environment of Bitcoin.
What more? RenBTC makes it possible for multi-chain intergration and smart contracts to be possible through its Ren Virtual Machine (RenVM).
The concept behind RenBTC is to bring the most valuable token ever built (Bitcoin) within the first versatile blockchain project ever built (Ethereum).
In other words, RenBTC sort of tokenized Bitcoin within the Ethereum ecosystem, as well as made interoperability a reality in such a way that it is possible to use a token representative of Bitcoin to accomplish more within networks that support more flexible activities such as smart contracts, De-Fi and even NFTs.
Since the token is pegged to Bitcoin, even though it is an ERC-20 token, the price of RenBTC is always close to the price of Bitcoin. This is the same concept that projects such as Wrapped Bitcoin wBTC employed.
As at the time of filing this report, Bitcoin was trading at $56,894 while RenBTC was trading at almost the same price. This is simply because the ERC-token tokens is pegged to BTC.
How It Functions
Ren BTC is a work in progress that presently supports a few blockchain protocols such as Zcash, Bitcoin Cash and of course, Bitcoin. Its cross-chain interoperability implies that these blockchains can be made to interact with decentralized applications built on Ethereum network.
For instance, if you have some bitcoins, you can actually use them on the Ethereum blockchain through RenBTC. This works through the lock and mint mechanism of the platform.
To use BTC in the Ethereum ecosystem, the holder sends their bitcoins to RenBTC, the minting of the token commences after the RenBTC blockchain locks the sent bitcoins. Token of equivalent value to the sent bitcoins are then minted, enabling the owner to use RenBTC in the Ethereum blockchain and ecosystem.
This process can be replicated in other blockchains that are supported by RenBTC such as Zcash and Bitcoin Cash. So in practice, the RenBTC platform enables you to convert your coins in these blockchains to a form that is usable within the Ethereum ecosystem.
What Happens To Converted Coins
As we have already stated, it is obvious that the cross-chain ability of RenBTC makes it possible to convert one token to another (RenBTC) which can be used on the Ethereum ecosystem.
This is why you’ll see regular burning of tokens on the RenBTC blockchain as seen from the network’s Twitter page. This is essential in balancing the token’s value and not have excess of it due to the extra coins sent to the platform.
🔥 Burned 7 $renBTC from address 0xb53c7b5c6e8204f8b61f4cb91632d6287f1b757c https://t.co/64dmrJnhxq
— renBTCBot (@renBTCBot) October 14, 2021
The RenBTC Protocol Hyperdrive
The RenBTC consensus protocol, hyperdrive is very fast, enabling faster transactions than what is obtainable from decentralized exchanges (DEXs).
The setback in the course of transaction conversion in terms of speed is at the Ethereum end of the cross-chain which is slower than RenVM hyperdrive. Ren limitation stems from being built on a slower Ethereum blockchain, but its merit is its internal blockchain speed and cross-chain functionality.
Other Advantages of Ren
High level privacy without compromising security.
Ability to host DEXs due to its interoperability as a multi-chain platform.
Flexibility and ability to host De-Fi projects and liquidity pools.
