Bitmain, known for its Application Specific Integrated Circuit [ASIC] miners, has recently proposed developing and implementing a protocol for smart contracts on the Bitcoin Cash [BCH] blockchain. The proposals reportedly emerged from Chinese WeChat groups comprising of developers from the company.
The proposal is for the full-fledged implementation of a concept known as colored coins. Colored coins are a way to realize real-world assets on the blockchain, with the concept being primarily proposed for the Bitcoin [BTC] blockchain. They are represented by small amounts of metadata on a standard transaction which can be used to store bits of code.
The code can be used to assign assets. For example, Asset A can be assigned to address XYZ when the blockchain reaches a specific timestamp. A protocol was developed for storing code in the metadata of transactions known as OP_RETURN.
The proposal that has gained the most acceptance for this idea on the Bitcoin Cash blockchain is the OP_GROUP protocol, which allows for native tokens on the blockchain. The catch is that the implementation of the OP_GROUP protocol can only be realized by changing the Consensus rules of the Bitcoin Cash blockchain itself.
Historically, consensus changes have caused rifts in the blockchain on which they were proposed. This has led to many developers to look for a solution that functions as a layer on top of the Bitcoin Cash blockchain.
Bitmain has proposed an implementation of the OmniLayer Protocol to circumvent this issue. The OmniLayer Protocol is what is used for the production of USD Tether [USDT]. The implementation allows for the protocol to run on top of the Bitcoin Cash blockchain, while not changing or manipulating any values required for consensus. This means that it can practically be implemented as a layer solution on top of the existing infrastructure.
The protocol is the basis for Wormhole which makes it possible to run smart contracts on the blockchain. The first token that has been issued with this protocol is known as Wormhole Cash.
The protocol’s functioning was elaborated upon by the Bitmain team. The implementation utilizes the OP_RETURN opcode to store the data regarding the tokens. The data regarding transference of the tokens between different contracts and burning of these tokens for transaction charges or similar applications will be stored in the OP_RETURN part of an unspendable Bitcoin Cash transaction. This means that the underlying technologies of tokens on the chain will be that of Bitcoin Cash transactions. The proposal states:
“Based on the Bitcoin Cash blockchain, Wormhole Cash adds new features like token issuance, transferring and burning into the BCH blockchain without changing the current BCH consensus rules.”
The OP_RETURN part of the transactions comprises of 220 bytes as of the protocol change update to the Bitcoin Cash blockchain in May 2018. The protocol multiplexes Bitcoin Cash’s transaction system to read OP_RETURN data and use it in conjunction with transactions and addresses.
The protocol was created with an emphasis to not change the consensus rules, as stated in the proposal:
“The Wormhole protocol is a superset of the Bitcoin Cash network consensus. The metadata it identifies is only the OP_RETURN data in the consensus protocol of the Bitcoin Cash blockchain, and consensus rules of Bitcoin Cash do not need to understand data in OP_RETURN.”
The proposal can be implemented with an integration into Bitcoin, which will then be known as Wormhole clients. Nodes running these specific clients will be able to identify the Wormhole protocol in the OP_RETURN part of the transaction.
The security of the protocol is ensured primarily by the Proof-of-Work [PoW] algorithm adopted by Bitcoin Cash. This is also multiplexed into the decentralized timestamp server model that has been running without issues for almost 10 years since the Genesis block of Bitcoin itself.
The second layer of security is that nodes that do run the Wormhole protocol do not analyze data that does not conform to the protocol. As stated by the proposal:
“Each node has the ability to reanalyze transaction data and calculate the most ‘recent legal final state’ of Wormhole Cash.”
Notably, Craig Wright, more popularly known as Faketoshi, offered his two cents on the matter, saying:
Subscribe to AMBCrypto’s Newsletter
Bitcoin Cash would be a perfect global coin for daily spending, claims Chainblock’s Federico Pecoraro
Federico Pecoraro, CEO of Italy-based crypto-company, Chainblock, made waves in the cryptospace after he suggested that Italians were shifting to cryptocurrencies owing to the country’s growing economic problems. The 2008 financial crisis hit the Italian economy badly, largely due to the huge public debt accumulated after years of excessive public spending.
According to Federico Pecoraro, the state of affairs offers an opportunity for many people and businesses to benefit from using decentralized money. In what is the most newsworthy bit of his take, he said that Bitcoin Cash (BCH) could be the cryptocurrency that would fit perfectly as a real global coin for daily spending, despite the fact that Bitcoin (BTC) is more likely to emerge as a better store-of-value. He added,
“We’re proud to support it on our products. Indeed, our clients have the opportunity to buy BCH through any of our services.”
Pecoraro also spoke about how Chainblock used the crypto-winter to develop new products and expand its customer base. He revealed that by the end of 2018, Chainblock recorded a 156% increase in transactions and a 144% increase in new users. Federico Pecoraro told Bitcoin.com,
“We love small businesses that want to accept crypto payments but we want to enable as many merchants as we can with a strategic market approach. Our goal is to provide affordable and scalable solutions for both big and small shops and spread real cryptocurrency mass adoption. We plan to enable 5,000 merchants to accept Bitcoin payments.”
Subscribe to AMBCrypto’s Newsletter