Nomic Launches Ethereum Support for Decentralized Bitcoin Custody

September 13, 2024 08:33 PM AEST | By Team Kalkine Media

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Nomic Launches Ethereum Support for Decentralized Bitcoin Custody — Image source: shutterstock

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Nomic introduced its nBTC on a testnet, marking a significant development in decentralized Bitcoin custody. This move allows users to manage Bitcoin on Ethereum without relying on centralized custodians, offering an alternative to Wrapped Bitcoin (WBTC), which is traditionally backed by BTC held in reserve by a custodian.

Nomic’s nBTC aims to simplify Bitcoin’s integration into decentralized finance (DeFi) by providing a trust-minimized solution. Unlike WBTC, which involves a centralized custodian, nBTC is backed by Nomic’s decentralized BTC reserves. This approach aligns with the broader trend in the crypto industry toward decentralization and transparency.

Matt Bell, CEO of Turbofish and a core contributor to Nomic, emphasized the importance of this innovation. " {Bitcoin} (BTC) is the highest-value crypto asset, and Ethereum is the leading DeFi ecosystem," Bell stated. "It’s time to move beyond the current centralized and clunky BTC-on-Ethereum offerings and start truly integrating Bitcoin into DeFi."

Nomic, part of the Cosmos ecosystem, allows nBTC to be utilized not only on Ethereum but also on other {Ethereum} (ETH) Virtual Machine (EVM)-compatible chains and within the Cosmos network. This flexibility is facilitated through Cosmos' Inter-Blockchain Communication protocol, expanding the potential use cases for nBTC across different blockchain networks.

Before nBTC, WBTC and tBTC were the primary options for integrating Bitcoin into DeFi. tBTC, initially issued by the Keep network, used multiparty computation to secure Bitcoin by distributing it through smart contracts. However, with the merger of Keep and NuCypher to form Threshold in 2022, there have been ongoing discussions about replacing WBTC's centralized custody model with tBTC's permissionless mint and redeem mechanism.

Recent developments have also seen BitGo transferring WBTC custody to a joint venture with BiT Global, a move that has stirred controversy due to Justin Sun's involvement. Additionally, the collapse of Alameda Research led to the shutdown of the renBTC platform, which had been another alternative to WBTC.

Nomic’s nBTC represents a shift toward more decentralized and user-controlled Bitcoin custody solutions, potentially reshaping how Bitcoin integrates with DeFi and enhancing the overall efficiency and transparency of digital asset management.

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