# CBTC Overview

> ⚠️ **API Disclaimer:** CBTC APIs are subject to change. There is no formal versioning policy today. Breaking changes are communicated via the site changelog.

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## What is CBTC? Bitcoin on the Canton Network

CBTC is a **1:1 wrapped Bitcoin token** built on the [Canton Network](https://www.canton.network/), a privacy-first blockchain for institutional finance. Each CBTC is fully backed by native BTC held in decentralized custody using FROST threshold signatures. CBTC is **CIP-56 compliant**, meaning it works with any Canton token-standard-compatible tool out of the box.

CBTC brings Bitcoin's liquidity into Canton's privacy-enabled smart contract environment, where app developers and trading firms can build trading, DeFi, custody, and settlement applications without exposing positions to a public mempool. Unlike wrapped Bitcoin on public chains, CBTC transactions are private by default, eliminating MEV (Maximal Extractable Value) risks like front-running and sandwich attacks.

**Key properties:**

| Property          | Value                                                                                                                   |
| ----------------- | ----------------------------------------------------------------------------------------------------------------------- |
| **Backing**       | 1 CBTC = 1 BTC, always                                                                                                  |
| **Standard**      | CIP-56 (Canton Instrument Protocol)                                                                                     |
| **Custody**       | Decentralized via FROST threshold signatures (no single party can move reserves)                                        |
| **Network**       | Canton Network (permissioned, private transactions)                                                                     |
| **Audit**         | [Quantstamp audit report](https://certificate.quantstamp.com/full/cbtc/5d0d805e-8cf0-4a39-bf1a-0e94899b3c1c/index.html) |
| **Confirmations** | 6 Bitcoin block confirmations (\~60 minutes) for minting                                                                |

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## CBTC Architecture: How Wrapped Bitcoin Works on Canton

The CBTC system bridges Bitcoin's UTXO model to Canton's Daml-based smart contract network through three layers:

### 1. Bitcoin Layer

Bitcoin transactions are monitored and verified. A user sends BTC to a generated Taproot deposit address. The system waits for 6 block confirmations before proceeding.

### 2. Attestor Network

A decentralised network of institutional-grade node operators independently verify Bitcoin deposits and withdrawals. Each Attestor runs nodes on **both** the Bitcoin and Canton networks. Key details:

* **Operators:** Pre-screened institutional node operators (including providers like Finoa and Nethermind)
* **Threshold:** A configurable M-of-N threshold of Attestors must approve every mint and burn operation
* **Coordination:** A Coordinator executes periodic checks (every 60-120 seconds), monitors deposit accounts, constructs Bitcoin transactions, and submits governance actions
* **No unilateral control:** No single party - including BitSafe or the Coordinator - can mint, burn, or move BTC without threshold approval

### 3. Canton Asset Layer

Daml contracts mint and burn CBTC tokens, but **only** after the required threshold of Attestor signatures is reached on the governance contract. CBTC is then held in the user's Canton party, fully under their control.

```mermaid
flowchart LR
 A["Bitcoin Network<br>(Taproot deposit address)"] -->|"6 confirmations"| B["Attestor Network<br>(FROST threshold signing)"]
 B -->|"M-of-N approval"| C["Canton Network<br>(Daml contracts mint CBTC)"]
 C -->|"Burn request"| B
 B -->|"Signed BTC tx"| A
```

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## Security Model: FROST Threshold Signatures for Bitcoin Custody

CBTC's security rests on **FROST** (Flexible Round-Optimised Schnorr Threshold Signatures), a cryptographic protocol added to Bitcoin with the Taproot upgrade.

**Why FROST matters for developers:**

* **Taproot-native:** Deposit addresses are standard P2TR addresses. Any wallet that supports Taproot can send BTC to mint CBTC.
* **Indistinguishable on-chain:** FROST signatures look identical to regular single-signature Bitcoin transactions. No one can tell from the blockchain that a threshold scheme is in use.
* **Smaller transactions, lower fees:** Compared to traditional on-chain multisig, FROST produces a single aggregated signature regardless of how many Attestors participated.
* **No single point of failure:** Even if some Attestors go offline, the system continues to operate as long as the threshold is met. For a full technical deep dive, see the [Security Deep Dive](https://docs.bitsafe.finance/developers/security-deep-dive) page. For the original research, see the [FROST whitepaper](https://eprint.iacr.org/2020/852).

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## What You Can Build with Wrapped Bitcoin on Canton

CBTC is a foundational layer for building institutional-grade financial products on Canton:

* **DeFi Protocols** - DEXs, lending platforms, and liquidity pools using CBTC as collateral
* **Custody and Wallet Solutions** - Institutional-grade wallets supporting CBTC and Canton-native assets
* **Structured Products** - Yield-generating vaults, options strategies, and derivatives
* **Payment and Settlement** - Instant, low-cost cross-border transactions
* **Trading Systems** - Spot and perpetual trading with Canton's privacy (no public mempool, no MEV)

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## Developer Resources

| Resource              | Description                                           | Link                                                                                                        |
| --------------------- | ----------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- |
| **cbtc-lib (Rust)**   | SDK for minting, burning, sending, and receiving CBTC | [GitHub](https://github.com/DLC-link/cbtc-lib)                                                              |
| **canton-lib**        | Lower-level Canton interaction library                | [GitHub](https://github.com/DLC-link/canton-lib/)                                                           |
| **CBTC DAR files**    | Daml packages to install on your Canton participant   | [GitHub](https://github.com/DLC-link/cbtc-lib/tree/main/cbtc-dars)                                          |
| **FROST Whitepaper**  | Original threshold signature research                 | [ePrint](https://eprint.iacr.org/2020/852)                                                                  |
| **Canton Whitepaper** | Canton Network technical overview                     | [canton.network](https://canton.network/)                                                                   |
| **Quantstamp Audit**  | Security audit of CBTC smart contracts                | [View Report](https://certificate.quantstamp.com/full/cbtc/5d0d805e-8cf0-4a39-bf1a-0e94899b3c1c/index.html) |
| **Data API**          | Analytics and rewards API for institutional clients   | [API Reference](https://docs.bitsafe.finance/developers/cbtc-api-reference)                                 |

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## Next Steps

* **Ready to code?** Start with the [Developer Quick Start](https://docs.bitsafe.finance/developers/cbtc-quick-start) - mint your first CBTC in 15 minutes
* **Need API details?** See the [API Reference](https://docs.bitsafe.finance/developers/cbtc-api-reference) for Canton Ledger API endpoints
* **Setting up authentication?** See the [Authentication Guide](https://docs.bitsafe.finance/developers/cbtc-authentication) for Keycloak setup (and an Auth0 community example)
* **Want to test first?** See the [Testnet Guide](https://docs.bitsafe.finance/developers/cbtc-testnet-guide) for sandbox environment setup

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