Earlier today, Coinbase announced the launch of “Bitcoin-Backed Loans” using BaseIts native blockchain. But there’s one problem. (Actually, two.)
These Loans are not guaranteed by BitcoinThe ‘nor are they on the Bitcoin blockchain.
It’s disappointing that, in 2025, companies are still willingly omitting key details to mislead Bitcoin Holders of coins are asked to surrender their coins.
Here’s the truth: these loans are collateralized by cbBTC, Coinbase’s Bitcoin-wrapped products designed to compete against wBTC or tBTC. This Not only is this not acceptable, but it also does not include Bitcoin. In fact, cbBTC is arguably the most centralized of these “wrapped” BTC tokens. To This excellent blog by The Bitcoin Layers team: Analyzing tBTC Against There are two types of Bitcoin: cbBTC (also known as wBTC) and wBTC.
Here’s the TL;DR:
“The The BTC that backs the cbBTC is stored in wallets of reserve managed by CoinbaseA US-based central custodian provider. Coinbase holds funds backing cbBTC in cold storage wallets across a number of geographically distributed locations and additionally has insurance on funds they custody.”
FurthermoreInstead of issuing loans that are even remotely connected to blockchain, Bitcoin Such as Bitcoin The side chains are available in a variety of styles. Bitcoin L2s), Coinbase Issuing them through Morpho LabsDeFi can be best described as AAVE’s competitor. While Morpho is a well-established platform—and I don’t doubt its security—it has no connection to Bitcoin.
The actual footage is something I am looking forward to. BitcoinThe issuance of -backed loan Bitcoin Network itself Many L2 teams are working hard to make this a reality, striving to minimize trust assumptions—or even eliminate the need for bridging altogether (bullish!).
Why do we need native BitcoinWhat are the benefits of a -backed loan? Consider Many Bitcoiners Today, long-term owners who decide to sell their property face strict tax regulations. Bitcoin Funding for major purchases, such as buying a house or vehicle. Taking By taking out a BTC-backed loan, individuals can avoid these tax events.
MoreoverThe most Bitcoiners We are sure that Bitcoin's price will be significantly higher in the future than it is today. So Why would someone sell an asset that has such a promising future? BitcoinHolders of secured loans retain the exposure to Bitcoin's upside while accessing the liquidity needed to meet life’s financial demands.
In today’s market, the options for BitcoinThe amount of backed loans is limited. You You can also rely on central companies, such as the team of professionals at UnchainedTurn or. "DeFi" Protocols, which can be centralized and in some cases riskier, than central alternatives such as Unchained. HoweverThere is no such thing as a truly Bitcoin-native solution—no option for Bitcoiners Maintaining custody of coins when obtaining loans.
Some companies, like LavaThe.xyz company is beginning to fill this gap. HoweverTheir market share is a fraction of what existing DeFi platforms can handle. (Keep Keep an eye out Lava—they’re poised to make waves in 2025!)
One Quote from the announcement that caught my attention:
“The Integrating BitcoinThe loans are backed up by the government. Coinbase is 'TradFi in the front, DeFi in the back,'” said Max Branzburg, Coinbase's vice president of product, in a statement to The Block.
Let’s call it what it really is: centralized in the front, and centralized in the back.
It’s time to leave these misleading offerings behind and bring true Bitcoin Finance (BTCfi) to users—not just marketing buzzwords and half-truths.
Instead ” Bitcoin backed on-chain loans let’s say: multisig-backed derivatives loans on a centralized chain.
This The article is also known as Take. Opinions expressed are entirely the authYou can also find out more about's and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
Articles I write may discuss topics or companies that are part of my firm’s investment portfolio (UTXO Management). The The views I express are mine alone and not those of my employer, or any affiliates. I’m receiving no financial compensation for these takes. Readers This content is not intended to be a financial advisor or a recommendation of whichever company or investment you choose. Always Do your research prior to making any financial decisions.
Every trader who trades cryptocurrency on the Binance exchange wants to know about the upcoming pumping in the value of coins in order to make huge profits in a short period of time.
This article contains instructions on how to find out when and which coin will participate in the next “Pump”. Every day, the community on Telegram channel Crypto Pump Signals for Binance publishes 10 free signals about the upcoming “Pump” and reports on successful “Pumps” which have been successfully completed by the organizers of the VIP community.Watch a video on how to find out about the upcoming cryptocurrency pump and earn huge profits.
These trading signals help earn huge profit in just a few hours after purchasing the coins published on the Telegram channel.Are you already making a profit using these trading signals? If not, then try it!We wish you good luck in trading cryptocurrency and wish to receive the same profit as VIP subscribers of the Crypto Pump Signals for Binance channel.
