The issue with Wormhole, summed up in one sentence
There has been a raging debate on a topic that has caused a significant divide in the Bitcoin BCH community. A contentious project has been launched that was purported to be an advance for the network. However, when the facts are revealed, what emerges is a nefarious plan that strips away the very heart of not just Bitcoin BCH, but the entire cryptocurrency ecosystem.
The project is Wormhole, a Bitcoin BCH smart contract platform. It has been co-developed by crypto mining giant Bitmain and is supported by Bitcoin ABC. According to the platform’s developers, “The Omni Layer runs on top of Bitcoin blockchain — Since the Omni Layer protocol uses the MIT license (open source), we forked the Omni Layer protocol and implemented the tech feature on Bitcoin Cash blockchain to achieve token issuance. We named this technical solution Wormhole protocol, and the original token in the protocol is named Wormhole Cash.”
The issue at hand is that it the project actually creates a new cryptocurrency that will turn the Bitcoin BCH network into nothing more than a veritable playground for developers. This could potentially lead to questions being raised about Bitcoin BCH’s security and causing the regulators to drop the hammer on the digital currency’s network.
Wormhole, according to a post by developers on Medium, can also “execute the issuing, transferring and burning of tokens. Since Wormhole is a protocol for BCH but operating separately from BCH, it uses an account/balance model that was best suited for a smart contract. Thus, we can successfully resolve the fundamental issue in BCH’s UTXO model.”
In order for a burn to take place, a special burn address needs to be created and this presents another problem—you can’t actually back anything in a burn. This means that the Bitcoin BCH sent to the burn address would become invalid. Burning implies a destruction of the asset, which makes any return on the asset worthless.
If those issues weren’t enough to cause people to question the legitimacy of Wormhole, a phrase hidden in the project’s white paper is the nail in the coffin. Developers acknowledge, in black and white, that they want to be able to manipulate the network. The white paper reads, “In the future, if any methods be used to create the private key of this address – the BCH protocol might prohibit coins in this address from being transferred.”
This shows that the developers are not thinking decentralization—the heart of cryptocurrency—and are fully prepared to wield their power over the network. They have also coded Wormhole to allow them to assert their control on a whim.
Elsewhere in the white paper, Wormhole developers make the claim that Wormhole can provide greater decentralization and independent outputs. However, given the fact that they have coded Wormhole to be able to control the network, where exactly is the decentralization?
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as SegWitCoin BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins. Altcoins, which value privacy, anonymity, and distance from government intervention, are referenced as dark coins.
Bitcoin Satoshi Vision (BSV) is today the only Bitcoin project that follows the original Satoshi Nakamoto whitepaper, and that follows the original Satoshi protocol and design. BSV is the only public blockchain that maintains the original vision for Bitcoin and will massively scale to become the world’s new money and enterprise blockchain.