Tech 11 May 2018

Cecille de Jesus

About the upcoming network upgrade: smart contracts on Bitcoin Cash

Tokenization and smart contracts on Bitcoin Cash can give Ethereum a run for its money.

As the scheduled hard fork for Bitcoin Cash (BCH) draws near, we look at what’s in the horizon for Bitcoin Cash. The hard fork, scheduled on May 15, is packed with some promising updates: a block increase to 32Mb, an increase to the OP_Return data carrier limit to 223 bytes, and the restoration of certain OP_Codes for advanced functionality. The last one is particularly intriguing, as it would unleash the smart contract and tokenization capability—on the security backbone that is Bitcoin.

The capability to run smart contracts is a feature more commonly associated with and popularized by Ethereum. Ethereum gave rise to thousands of blockchain projects, and thousands too many cryptocurrencies and ICO’s—most of which are only out to make a quick buck off the hype.

This attracted a huge stampede of wannabe developers, and as a consequence gave rise to thousands of less-than-solidly-built code. Project founders were very eager to get to the ICO stage, so much so that they launch their projects prematurely and jump into the ICO frenzy. In fact, a study dedicated to assessing vulnerabilities on the Ethereum network found an additional 34,200 risky smart contracts on the network, with almost $13.8 million at risk.

Unsurprisingly, the past years have been quite rocky for the network, as several incidents cost investors hundreds of millions of dollars. Not all of these were lost to theft, however—some of these were merely casualties of slip-ups, bugs in the code that left investor funds susceptible to loss through seemingly innocuous commands. This has caused some to rethink building their projects on the Ethereum blockchain, and pushed some to urge the community to start holding developers accountable for their negligence.

Tokenisation and smart contracts will bring Bitcoin Cash directly head-to-head against Ethereum. With Bitcoin Cash stepping in the game—resurrecting previously deactivated OP_Codes that would unleash its smart contracts functionalities, it can effectively give Ethereum a run for its money. nChain CEO Jimmy Nguyen says the resurrection of these functionalities will propel the network to the forefront of the industry.

“The second key upgrade is restoring certain OP_codes that had been deactivated in the Bitcoin script language.  These OP_codes are being brought back to Bitcoin Cash to enable the ability for tokenisation and smart contract execution on the BCH network.  This will be a game-changer in the cryptocurrency space because it makes Bitcoin Cash the clear leader, with the ability to do all in one coin-efficient payments and advanced technical functions such as tokenisation and smart contracts – what many other coins and blockchains separately claim to do.  We at nChain and other groups have already been working on new tokenisation solutions to implement on Bitcoin Cash.”

In a press release, nChain expounded on what this would enable on Bitcoin Cash:

“The restoring of certain OP_Codes in the Bitcoin scripting language will bring advanced technical functionality to the Bitcoin Cash network. In computing, operating codes are the section of automated language which dictates what operation must be performed. The restored OP_Codes will enable tokenisation and smart contracts to be executed on the BCH blockchain.  More advanced functions will be possible with future upgrades to the Bitcoin Cash network.

Tokenisation – of financial instruments, assets, rewards, or for Initial Coin Offering (ICO) purposes – and the ability to make use of smart contracts, means that Bitcoin Cash can be used to do anything that other blockchains such as Ethereum, can do. Bitcoin Cash is already a superior payment system, because it is fast, low-fee and allows borderless transactions to anywhere in the world. With these additional technical capabilities, Bitcoin Cash can be the all-in-one coin,” they wrote.

Speaking at the University of Exeter last week, Nguyen further reiterated how these developments will drive Bitcoin Cash forward in the competition, and how it may drive some into obsolescence.

“At the end of the day, as I explained, if all those things are possible on one coin, why do you need the others?,” Nguyen asked. “There were some that birthed, like Ethereum, because they wanted to do smart contract capability which people did not think was possible on Bitcoin—because some people turned off some of the OP_Codes. Now that they’re restored, you have to ask yourself how much do you need Ethereum anymore?”

Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB 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.

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