Binance Announces Bitcoin-pegged Token For Cross-Chain Trading On its Decentralized Exchange

Binance, arguably the world’s biggest exchange by trading volume, is launching a token pegged to Bitcoin. The aim is to make Bitcoin accessible to traders on its decentralized exchange, Binance DEX.

Centralized custodians and institutions to match buyers and sellers are absent in decentralized exchanges. Instead, an algorithm directly matches buy and sell orders between traders, significantly reducing costs and time associated with trading.

Within the cryptocurrency ecosystem, the situation is complicated by the fact that each cryptocurrency has a separate blockchain for to record transactions. For the most part, these blockchains do not “talk” to each other, making it difficult for cryptocurrencies to talk to each other. While cross-chain atomic swaps technology to ensure portability of coins between different blockchains, a bitcoin pegged-token will enable traders at Binance DEX to trade directly with each in Bitcoin.

Binance’s Bitcoin token is referred to as BTCB and will be backed by 9,001 Bitcoin, amounting to approximately $81 million based on today’s price. Other details, such as the numbers in circulation as well as specifics of its use, have not been released.

Binance DEX was launched earlier this year and the it is still undergoing extensive user testing. Changpeng Zhao, Binance’s CEO, announced a giveaway of more than $100,000 worth of BNB coins in March to spur adoption and testing of the platform among users. Earlier this month, Binance announced that it had blocked users from 29 countries, including the United States, from trading on its decentralized exchange. Binance’s main exchange followed suit last week. The exact number of users on Binance DEX has not been released.

The concept of stablecoins, or coins that trade at parity with a fiat currency or a basket of goods, has quickly caught on within the cryptocurrency ecosystem in recent times. For example, social media behemoth Facebook is expected to announce a stablecoin backed by $1 billion in reserves. In its post making the announcement, Binance made the case that backing its token with cryptocurrency reserves will provide a “high degree of transparency” for auditing. Ostensibly, this is a reference to public blockchains that display fund balances and transfers between addresses. Binance already requires traders to upload identification information as part of KYC compliance.

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