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Smarts Contracts are coming to Bitcoin Cash, Here's All You Need to Know

Smarts Contracts Are Coming to Bitcoin Cash, Here’s all you Need to Know

Reading Time: 3 minutes by on July 20, 2018 Bitcoin, Business, Development, News
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The Bitcoin Cash team partnered with Bitmain to enable Smart Contract technology over the bitcoin cash blockchain using a Tokenization protocol called Wormhole.

Bitcoin Cash’s Smart Contract Push

According to, on July 16, 2018, Bitmain developers have proposed the implementation of a tokenization protocol which enables smart contracts on the BCH blockchain. The proposal was first introduced through a WeChat group, and the discussion was centered on adding a Tokenization without having to change consensus rules thus avoiding a skirmish in the community.

The tokenization feature used was based on the Omni Layer Protocol. The wormhole protocol is a tokenization feature that enables smart contract functions. It seems that the leading developer team, along with Bitmain developers has agreed on working together to implement this feature.

Permissionless innovation

Bitcoin Cash was born from a hard fork on the Bitcoin blockchain. The Bitcoin blockchain split was done at the block height of 478,558 and Bitcoin Cash was born. Bitcoin Cash came with the promise of fast, reliable and scalable digital cash. Its promises incorporated Satoshi’s original idea of a world with a currency allowing permissionless innovation, global circulation, and decentralization among other features.

The Tokenization Proposal

The WeChat group that initially proposed token features started by trying to understand how to issue token on the Bitcoin Cash blockchain. A lot of ideas came up, and colored coins were one of these ideas. Then, Andrew Stone proposed to increase OP_GROUP. This would implement the token scheme in Enable representative tokens via OP_GROUP on Bitcoin Cash.  With this tweak, functions similar to that of the ERC20 token protocol on the Ethereum network could be enabled. This was the option to which everyone participating in the discussion agreed on. However, there was a problem. The problem was because proposals allowing token issuance requiring specific consensus upgrades would carry other issues. These issues could include technical risks, harsh conflicts and massive controversy among community developers which could end up in failure. It could lead to the same type of debate that gave origin to Bitcoin Cash itself.

Since adding this new feature would eventually lead to changes in the consensus rules, the team also went ahead and started to explore other ways of implementing smart contracts on the BCH blockchain that wouldn’t require meddling with the consensus rules. Following a tan effort to find alternatives that wouldn’t interfere with consensus, the team found the Omnilayer protocol. The Omnilayer protocol is the technical basis for daily distribution and circulation of USDT and could be applied to allow token issuance through the OP_RETURN opcode.

Since the Omni Layer runs on top of Bitcoin blockchain and uses the MIT license (open source), the team used it to implement the tokenization feature on Bitcoin Cash blockchain. The solution was called Wormhole protocol, and its protocol token is named Wormhole Cash.


  • OP_RETURN: One of the opcodes in Bitcoin Cash. Any transaction outputs containing it is Unspendable, and nodes can safely move it out of the UTXO collection without affecting the total volume of the UTXO collection. After the protocol upgrade in May 2018, BCH increased its default data-carrier-size to 220 bytes.
  • Wormhole protocol: based on the Omni Layer protocol. Enables smart contracts on the Bitcoin Cash blockchain.
  • Wormhole Cash: The currency that fuels the Wormhole protocol (WCH). The Wormhole protocol multiplexes Bitcoin Cash’s transaction transfer system to read transactions, addresses, and OP_RETURN data on Bitcoin Cash blockchain. Issuance, transferring and burning of Wormhole protocol-based tokens can only be completed through Bitcoin Cash transaction, and through recognizing (reading) data stored in OP_RETURN.

Integration Method

Wormhole protocol is integrated into Bitcoin without the need of changing consensus rules. Wormhole uses Wormhole clients who are Nodes running the Wormhole client capable of reading the OP_RETURN Wormhole protocol.

Security and Consensus Rules

Wormhole Cash adopts a two-layer security approach. The first layer is represented by the transaction itself, carried out in a POW algorithm as a decentralized timestamp server while the second layer is that nodes are running read the Wormhole protocol data.

All of this seems good news for the community, but little is still known about the implementation of this new protocol. Over the coming few weeks, Bitmain is expected to reveal detailed information on the new implementation.

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