Would You Buy Pulsechain's Paper Bitcoin?
Remember that old Roseanne "speed of stupid" scene? The character Jackie is so distracted she doesn't notivce the most obvious problem staring her in the face. That is sort of what is happening on Pulsechain.
Last week Pulsechain
copy-paste forked from Ethereum Most of the first week Pulsechain was isolated with no bridge to the native Ethereum or any other blockchain. Now that Pulsechain has a bridge some Pulsechain users are starting to realize that all of those copy-pasted facsimile counterfeit forked tokens really don't have much value when nobody is backing them.
On my main @holovision account the other day I wrote:
Problems like "the biggest airdrop in history" copying thousands of layer 2 tokens from Ethereum to Pulsechain. Tokens like wrapped bitcoin which is currently priced at $13.58 on dexscreener.com/pulsechain. No, it's not suddenly 2011 again. The WBTC on Pulsechain have no actual value. They're just facsimiles of the WBTC on Ethereum with nothing backing any value other than the Greater Fools who may or may not know that actual bitcoin has a hard cap of 21 million. Copied bitcoin is only copied bitcoin. Photocopied Disney stocks probably have more value.
Right now the WBTC is Pulsechain is $46.50 while "actual" BTC, wrapped or unwrapped, is $27,175.20. Note also that the Pulsechain WBTC is only paired to the token Richard Heart minted. Having a token from Ethereum paired with the tokens Richard Heart has minted is something of a motif for trading on Pulsechain.
The purpose of wrapping BTC on Ethereum is to enable its use within the Ethereum ecosystem, including decentralized exchanges (DEXs), lending platforms, and other decentralized applications (dApps). A trusted custodian, such as a centralized exchange, holds the actual BTC reserves in custody. The custodian ensures the security and integrity of the underlying BTC.
What Pulsechain did with WBTC on Ethereum was just make a derivative of the WBTC on its own blockchain. No new BTC was actually mined or creaed. No custodian wants to add their own BTC out of pocket to add to the reserve and honor an off-chain facsimile WBTC sent back to the original blockchain.
Who would want to send 1.0 WBTC worth $27,175.20 over a bridge to a blockchain where it is only worth $46.50? Maybe liquidity can be built up by using Richard Heart's minted WPLS but that enriches Richard Heart more than the Pulsechain users.
Seekingalpha.com has an article by Stony Chambers Asset Research about the problem of making a derivative of the Ethereum blockchain and why it is unlikely issuers of value will default on their Ethereum obligations in order to honor the Pulsechain copy-paste tokens.
Maybe Pulsechain WBTC will reach parity with actual WBTC someday. I still wouldn't buy it today. The Pulsechain WBTC is a copy of an IOU from another blockchain. It's not real WBTC backed by BTC. It never could be real BTC because there is a 21 million BTC cap on bitcoin and copying tokens doesn't change that fact. Buying Pulsechain WBTC for speculation would just make me part of the problem.