In a prior comparison discussion between ckBTC and THORChain, it was noted that while THORChain offers similar functionality to the Internet Computer's ckBTC integration, it relies on a network of bridges and incentivized user trust to enable cross-chain asset trading. In other words, THORChain's solution to multi-chain integration can be viewed as economic rather than technological. This approach, as has been noted, introduces additional risks and fees that are not present with the direct integration of ckBTC onto the Internet Computer network.
But what about Cardano's new take on wrapped Bitcoin?
Cardano Wrapped Bitcoin (cBTC) Versus Chain Key Bitcoin (ckBTC) on the Internet Computer
Cardano's cBTC and the Internet Computer's direct ckBTC Bitcoin integration are both approaches to integrating Bitcoin into their respective platforms for use in DeFi. Each approach could help with mainstreaming DeFi Bitcoin trades. However, there are some key differences between the two, with ckBTC clearly coming out on top.
Cardano's Wrapped cBTC
Cardano's cBTC is a synthetic asset that is pegged to the value of Bitcoin. Essentially, it allows users to trade Bitcoin on the Cardano platform without actually holding any Bitcoin. This approach is similar to other synthetic Bitcoin assets, such as WBTC and renBTC, that are available on other platforms like Ethereum. While cBTC offers users the ability to trade Bitcoin on Cardano, it does not provide any direct integration with the Bitcoin network itself.
And, although Cardano's solution does eliminate the need for a centralized human custodian, the risks inherent in bridges are still present with cBTC. It's important to note that bridge risks are a significant concern when it comes to tokenizing any assets on a blockchain network. The risks associated with bridges include the possibility of double-spending attacks, smart contract vulnerabilities, and network downtime. The direct integration of ckBTC onto the Internet Computer network mitigates these risks as it eliminates the need for a bridge altogether.
Internet Computer's Chain Key ckBTC
Compared to cBTC on Cardano, the ckBTC integration on the Internet Computer offers a more efficient and direct approach to integrating Bitcoin onto a blockchain network. It eliminates the need for a bridge and processes transactions at Web speed, reducing the risks and other costs associated with DeFi.
Furthermore, the integration allows Bitcoin to be used natively on the Internet Computer, which means that users can access the full suite of features available on the network, including upcoming direct integration with Ethereum and InfinitySwap's Ethereum Virtual Machine. This is made possible by integrating the Bitcoin network directly into the Internet Computer's protocol.
As a result, users can transfer Bitcoin to and from the Internet Computer without needing to go through a third-party service. This direct integration makes it easier and more convenient for users to use Bitcoin on the Internet Computer without worrying about bridge risks or relying on synthetic assets that could become unpegged from the actual value of their target asset - this is what happened to Tether with respect to USD.
Conclusion: ckBTC is the Better Integration Solution
Overall, while both cBTC and ckBTC offer ways to integrate Bitcoin into their respective platforms, the direct integration provided by ckBTC offers clear advantages including the complete elimination of intermediaries and bridges, as well as access to the Internet Computer blockchain's superior transaction speeds and features. By enabling direct use of Bitcoin on the Internet Computer, ckBTC provides a more efficient and convenient way for users to access the Bitcoin network overall and unlocks the DeFi potential of Bitcoin.