What is cbBTC?

cbBTC, or Coinbase Wrapped BTC, is an ERC20 token fully backed 1:1 by native Bitcoin (BTC) held securely by Coinbase. Each cbBTC in circulation is matched by an equivalent amount of BTC held in Coinbase’s custody solutions, including cold storage. This ensures that cbBTC remains a reliable and transparent representation of Bitcoin, allowing users to seamlessly integrate their BTC holdings into the DeFi ecosystem.

How does cbBTC work?

cbBTC operates through a minting and burning process managed by Coinbase using audited and secure Ethereum smart contracts. When users deposit BTC into their Coinbase accounts, an equivalent amount of cbBTC is minted and sent to their Ethereum or Base network wallet addresses. Conversely, when users wish to redeem their cbBTC for BTC, they deposit the cbBTC back into their Coinbase accounts, where it is burned and the corresponding BTC is released from Coinbase’s reserves. This process ensures that the total supply of cbBTC always matches the amount of BTC held in custody, maintaining trust and transparency.

How is cbBTC backed 1:1 with BTC?

cbBTC is backed 1:1 with native BTC held by Coinbase in secure custody solutions, including both hot and cold wallets. Coinbase ensures that for every cbBTC token minted, there is an equivalent amount of BTC reserved and securely stored. The BTC reserves are managed by Coinbase’s investment manager, E.Q. Capital, and are protected by rigorous security measures, including multi-signature access and regular internal audits. This robust backing mechanism guarantees that cbBTC holders can redeem their tokens for the underlying BTC at any time, maintaining the token’s stability and reliability.