What is The Ren Protocol in crypto? ren bTC explained.

The ren project’s main goal is to provide access to inter-blockchain operability by allowing trust-less over-the-counter trades. This means they want to try to be a bridge between a bunch of blockchains, without you having to trust someone with your funds.

Ren works as a bridge between two cryptocurrencies to bring a coin without smart contracts to another coin that does have smart contracts so that you can do more with it. Right now, Ren can bring Bitcoin, Bitcoin Cash, and Zecash from their networks to Ethereum.

How do RenBTC work?

Ren created something called the RenVM, which is a special piece of technology they have designed that accepts true bitcoin, and then spits out an ethereum token that is a representation of that bitcoin they created. This way the Bitcoin token on the Ethereum network has the same value. Whenever someone wants to, they can take their renBTC, give it to the RenVM and it’ll give them back their true BTC. So they are practically the same thing, however the ethereum token renBTC is just a representation of true BTC redeemable at any time. 

What is RenVM?

The renVM is operated by a network full of what ren calls “DarkNodes”. In reality, these are very similar to Bitcoin miners or Ethereum miners that participate in the network to add security and confirm transactions. 

They are called darknodes because the people running them can’t actually see how much cryptocurrency is being converted and validated, or where it’s being sent through their machines.

Anyone can become a renVM validator, or miner, as they use the proof-of-stake consensus module, but you must lock up 100,000 ren, which is a decent sum of money at the moment. Because of this, ren’s largest downfall is probably centralization. And not in the traditional way where one company can control all the decisions, but in the way that there are only around 2000 darknodes online, and that a small portion of them do a large majority of the work. 

What are advantages of RenBTC?

The first benefit is security. Instead of going through an exchange, which you would have to trust that the exchange didn’t steal your funds and would actually give you the tokens you wanted to convert, renBTC is trustless and done through code. Another pitfall you don’t have to worry about is a central company creating a ton of free renBTC for themselves – similarly to how Tether works, which the Coinbase, Gemini, and Binance stable coins could probably all do if they wanted. 

The second benefit is being anonymous. In terms of taxes, I do not think the IRS has thought about, and then approved, a way for you to explain how you traded your BTC for ETH through a network. I guess you would say you bought renBTC and sold BTC, although technically you still own the original BTC, so maybe it’s a loan? What would you tell them, let us know in the comments below? In short, you can trade your BTC for ETH without having to explain yourself, pay taxes based on government records, or answer any questions. 

Scopes in future of RenBTC.

Ren works on a few blockchains like Ethereum, Polkadot, Binance Smart Chain, and Solana. However, they have not created a system to swap all of these together. In the future, they want to allow you to swap your renBTC from Ethereum to Binance Smart Chain networks easily. Right now, you must take your Ethereum renBTC, redeem it for true BTC, then give it back to the renVM and tell it you want the Binance Smart Chain version of renBTC. 

Ren is also looking into a form of insurance for all the tokens in the VM, which is quite interesting as token insurance is a new idea, especially for such a large project. 

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