Since the early days of Bitcoin, people have tried to use the underlying blockchain for other applications, such as alternative assets. This is possible due to the OP_RETURN instruction of the Bitcoin virtual machine, which allows storing arbitrary data on the blockchain.
Bitcoin.com has just made representing assets on the Bitcoin Cash blockchain much easier by launching the Wormhole SDK, a developer framework for creating tokens on Bitcoin Cash.
The OP_RETURN code has a controversial history within the Bitcoin community. The virtual machine feature allows storing arbitrary data in small chunks on the blockchain. Of course, people have used this for all sorts of things. By now we can find almost anything on the blockchain, including a photo of Nelson Mandela, Wikileaks documents, the original Bitcoin paper and many other pieces of data.
Whilst this script code has been present in Bitcoin since the early days, many have been opposed to its arbitrary use and have labeled it a source of spam on the Bitcoin blockchain. The data field size was even temporarily reduced from 80 to 40 bytes.
However, since the infamous fork in August 2017, the emerging Bitcoin Cash community has been more open to using these features. In a recent protocol update in May 2018, the data field has actually been expanded to 220 bytes.
The Wormhole SDK has been developed by Bitmain and is based on the Wormhole protocol which allows the creation of tokens, crowd sales and permissionless smart contracts on the Bitcoin Cash blockchain. The protocol is a fork of Omni Layer which provides similar features and is used, amongst other applications, but the Tether USDT stablecoin.
An Alternative to Ethereum?
The critical reader may ask how it is possible to implement complex smart contracts on a blockchain without a Turing complete virtual machine. The answer to this question is that talking about creating tokens on Bitcoin Cash is slightly misleading. Wormhole is a separate platform that backs up all transactions as data on the on the Bitcoin Cash blockchain. Essentially, the platform leverages Bitcoin’s integrity preserving global consensus network as a security layer.
Wormhole uses its own token, Wormhole Cash (WHC). This currency is issued by burning Bitcoin Cash. Already minted WHC can be purchased on exchanges.
Ethereum has been the go-to platform for token development and ICOs. Can the Wormhole and Bitcoin Cash combination be a viable alternative? Those that have accused Ethereum of being centralized due to its governance model might find an alternative in Bitcoin Cash. In terms of performance, Ethereum is likely to have the edge, as block generation time is much faster. It remains to be seen, whether Bitcoin Cash will be adopted as a token and smart contract platform. For now, it is good to see alternative uses of the blockchain to be embraced.