WBTC / Wrapped Token

A wrapped token is a cryptocurrency whose value is pegged 1:1 to another underlying asset, allowing that asset to be used on a blockchain it does not natively belong to. The canonical example is WBTC (Wrapped Bitcoin), which represents Bitcoin on the Ethereum network: for every WBTC in circulation, one real Bitcoin is held in reserve by a custodian. This lets Bitcoin holders participate in Ethereum-based decentralised finance and gambling platforms — which run on smart contracts that cannot directly handle native Bitcoin — without selling their BTC. Worked example: a player wants to use Bitcoin on an Ethereum-based crypto-casino that only accepts ERC-20 tokens. They send 1 BTC to a custodian or bridge, which locks that Bitcoin and mints 1 WBTC on Ethereum. The WBTC, worth the same as 1 BTC, can then fund smart-contract bets on the platform. To exit, the player 'unwraps' by returning the WBTC, which is burned, and the custodian releases the original Bitcoin. Why it matters: wrapped tokens unlock liquidity between otherwise incompatible blockchains, broadening the range of assets a crypto-gambling site can accept. The critical caveat is custodial and bridge risk. The 1:1 peg holds only as long as the custodian genuinely holds the reserve and remains solvent; if the custodian fails or a bridge is hacked — a recurring source of major crypto losses — the wrapped token can lose its peg and its value. You are trusting that reserve, which reintroduces exactly the counterparty risk that 'trustless' crypto is often assumed to remove. Treat custodian reputation and audit status as the real risk, alongside the legality of crypto gambling in your jurisdiction. Compare with the crypto-casino, the smart contract and variance.