Ren Protocol | Using Bitcoin As Collateral For MakerDAO? | Tom Heavey Crypto Interview

Welcome to the first video of our '3 minutes or less series' - a series of short videos designed to briefly explain a Cryptocurrency project.

If you'd like to watch our full interview with Ren Protocol, click here - (Link coming soon)

Ren Protocol is tackling the major issue of interoperability in the Cryptocurrency sector.

First up, what is the blockchain interoperability problem?

In their current form, blockchains such as Bitcoin and Ethereum cannot communicate with each other. They cannot share data, transactions and business logic cannot easily be ported over.

Take MakerDAO as an example. Through the MakerDAO solution, the decentralised stablecoin known as Dai has been created. In order to maintain Dai's stability at a value of $1, it is collateralised by Ether.

Ether's great, but when we're talking about collateralisation and maintaining stability, we would prefer to use a less volatile asset. While Bitcoin isn't the least volatile asset either, it does exhibit much greater stability than Ether.

Therefore, wouldn't it be great to also use Bitcoin as collateral? While it would, the issue of interoperability rears its head. MakerDAO is built on Ethereum, not Bitcoin. As Bitcoin and Ethereum cannot communicate, we encounter the same old problem.

In order to overcome this, some companies are producing what is known as 'wrapped Bitcoin'. This is essentially creating a token on Ethereum which represents Bitcoin, locking the Bitcoin away safely, and then using that wrapped Bitcoin token instead. In a sense, this would be using Bitcoin by proxy.

However, the issue here remains that this is relying on a company, or group of companies, to store the Bitcoin safely and produce tokens. In the world of decentralisation, it almost goes without saying, but the end goal is to not rely on centralised parties.

Ren Protocol introduces a truly decentralised solution to solve the interoperability issue.
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