GlassNode shows that 61% of BTC hasn't moved in over 1 year, while Bitcoin tokens on the Ethereum blockchain hit a new high recently.
New data revealed by GlassNode, they point out that approximately 61% of coins bitcoins have remained motionless for over a year. The data was released on the renowned website Reddit, where a user posted the insights generating debate about it. Let us remember that GlassNode, a renowned data analysis company, blockchains which provides market metrics and data sharing for institutional and retail investors, has made this data public.
GlassNode's data is in line with what blockchain intelligence firm, Chainalysis also noted in a recent report, indicating that More than 60% of the current Bitcoin supply is held as a long-term investment by the owners.
Source: GlassNode
Yet, in contrast to this, other data sources show a huge growth in the amount of bitcoins locked within the blockchain. Ethereum recently. According to data revealed by BTC on Ethereum, ERC-20 tokens linked to the leading cryptocurrency hit a new high over the weekend, reaching a total of 14.440 bitcoins locked in Ethereum, representing a value of over $136 million based on the cryptocurrency’s price at the time of writing.
It may interest you: Chainalysis: Over 60% of Current Bitcoin Supply Held as Long-Term Investment
The most used Bitcoin ERC-20 tokens
The data indicates that the most widely used Bitcoin-linked ERC-20 tokens within the Ethereum blockchain are WBTC (Wrapped Bitcoin) with more than 70% of tokens issued, followed by renBTC (of Ren Protocol) and sBTC (of CurveFinance), who recently joined the performance farming craze”yield farming” through ecosystems DeFi. However, for several industry experts, such as Anthony Sassano, co-founder of the educational platform EthHubThis increase in the amount of locked Bitcoin tokens is negative for both the asset itself and the network.
Through a post on his Twitter account, Sassano explains that users can choose to use Bitcoin through tokens on Ethereum and not on the original blockchain, so it may lose transactional volume in the long term and therefore the Commissions paid to miners who keep the network secure.
Sassano explains that in the long term “People can bypass the Bitcoin network and go directly to Ethereum for BTC exposure”, a fact that would destroy Bitcoin’s security, as miners would not receive enough fees and may choose to leave the network. Given these assumptions, several users pointed out that it would be absurd not to use the Bitcoin network and instead use Bitcoin tokens on Ethereum, since neglecting the security of the original blockchain would also destroy the security and utility of tokenized bitcoins on another network. Still, Sassano argues that the way Ethereum operates tokens may cause the Bitcoin blockchain to lose priority to it.
Risks associated with tokenized Bitcoin
Ethereum is a decentralized, open-source network designed for building and deploying decentralized applications (dApps) and smart contracts (smart contracts), but in addition, Ethereum has a standard that allows the design and creation of new tokens on its blockchain, without interrupting the functionalities of its native token, the Ether.
This standard is what makes possible the creation of ERC-20 tokens, such as the tokenized bitcoins we mentioned above, WBTC, renBTC, sBTC and several others. However, behind these tokens there is the figure of a company or custodian company that is responsible for ensuring the value of the tokens with respect to the original bitcoins. So, when a user needs a Bitcoin token, they must send the amount in Bitcoin to the custodian so that they can return the same value in tokens, and that is where the risk lies. The user must place their trust in a third party when using Bitcoin tokens to safeguard the value of the original cryptocurrency, and even if this custodian acts honestly, an external event can influence their ability to maintain liquidity to support the value of the blocked coins, causing losses to users.
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