The team behind tBTC is aiming for an Ethereum mainet release in March. (image: Shutterstock)

Bitcoin has been tokenized on the Ethereum blockchain again. This time it’s interoperability solutions provider Summa and the Keep Network, a privacy layer for Ethereum (ETH), building the token, called tBTC.

On Thursday, it debuted on Ethereum’s testnet, and a mainnet launch is planned in March. The project hopes to bring Bitcoin (BTC) into the Decentralized Finance (DeFi) industry. Could this be the most important project to launch on Ethereum in 2020?

The launch is big news especially for DeFi; tBTC means that Bitcoin holders can now earn interest on lending dapp Compound; get a loan from MakerDAO or a non-collateralized one from Aave; trade or lend on Fulcrum or dYdX; save with Dharma Network or Pool Together, and much more.

Up to now it’s been a pipe dream, despite several attempts to recreate a trustless way to bring Bitcoin to Ethereum. But tBTC creates a workaround: essentially, a decentralized issuance mechanism between two parties.

A better form of tokenized Bitcoin

This isn’t the first version of Bitcoin on Ethereum. But it offers several benefits.

Synthetix’s sBTC, a synthetic asset which gives investors exposure to Bitcoin’s price movements, doesn’t allow it to be used in DeFi applications. So, this new token has more potential there.

And a solution such as Wrapped Bitcoin, or wBTC, mandates a user to undergo know-your-customer (KYC) procedures, mint the token from a third party, and doesn’t let them hold their own tokens. Instead, tBTC allows users to mint and hold the token themselves, suiting the Ethereum ethos.

tBTC is not the only project working on a solution, others such as Ren Protocol, are also striving to bring Bitcoin to Ethereum in a decentralized way.

But they’ll need to be quick. tBTC contracts are currently being audited, leading up to the mainet launch, and there are plans to integrate it into lending platforms like Compound, immediately after. The race is on.