CashTokens: The native token of Bitcoin Cash is officially launched

Source: ElBitcoin Original Title: CashTokens: los tokens nativos llegan a Bitcoin Cash Original Link:

Introduction and Background

At the end of 2008, the idea of Bitcoin was proposed as “a peer-to-peer electronic cash system.” In fact, Satoshi Nakamoto used this phrase as the title in the technical document outlining the protocol fundamentals. According to Satoshi Nakamoto himself, electronic cash means direct person-to-person payments “without the need for financial institutions,” a premise that remained the foundation of Bitcoin-BTC until 2017, when supporters of “Bitcoin as cash” had to migrate to an independent network called Bitcoin Cash (BCH). Therefore, the concept of digital currency is the starting point of the entire Bitcoin technology, especially in the case of BCH, which considers this feature as non-negotiable.

This feature is not incompatible with integrating other use cases, as long as doing so does not compromise the ability to use BCH as a currency or expand its system so that more and more people can adopt it as money.

In this sense, Bitcoin Cash (BCH) has a process for proposing, discussing, and standardizing ideas called “CHIP” (Cash Improvement Proposal), similar to Bitcoin-BTC’s “BIP” or “Bitcoin Improvement Proposal,” allowing the community to discuss and evaluate the appropriateness of ideas for adding new features to applications, and even to the protocol that runs the currency.

One of the features pursued over the years is the possibility of transferring other assets on the Bitcoin Cash blockchain. In the cryptocurrency world, these assets are often called “tokens” or “passports,” and are popular in many crypto ecosystems, providing additional economic activity to the networks they run on. If equipped with smart contract capabilities, they can be exchanged on decentralized exchanges or used on DeFi platforms.

When BCH first separated from BTC, there were several token proposals based on the “colored coins” concept, which refers to transactions that include metadata to transfer tokens (for example, sending small amounts of Bitcoin Cash). In other words, it involves using BCH transactions as carriers for other assets, requiring a protocol capable of interpreting this additional metadata as tokens, transfer amounts, etc.

This idea was later implemented on the Bitcoin Cash (BCH) network through several protocols, the most well-known and longest-lasting being the “Simple Ledger Protocol” or “SLP tokens.”

However, the “colored coins” model has certain limitations, such as requiring additional software to verify the information it contains, and needing at least one confirmation before considering these transactions valid. Due to these flaws, “colored coins” represent a feasible alternative for sending and receiving tokens but cannot match the features of underlying currency payments.

New Standard: A Better Model

On May 15, 2023, Bitcoin Cash (BCH) will integrate new features through an update, including the ability to transfer tokens without the restrictions of the “colored coins” protocol. This new feature’s technical specification is identified as “CHIP-2022-02,” titled “CashTokens: Native Token Primitives for Bitcoin Cash.” In simple terms, CashTokens are a superior solution compared to SLP tokens’ “Simple Ledger Protocol,” with the following distinguishing features:

• The infrastructure for SLP tokens requires running an “SLP node,” i.e., additional software to verify transactions based on the embedded metadata. In the case of CashTokens, only a Bitcoin Cash node is needed, allowing miners and full node operators to validate its effectiveness.
• SLP token transactions are incompatible with zero-confirmation transactions, so accepting unconfirmed transactions carries risks. CashTokens transactions are compatible with zero-confirmation, making it reasonable to accept unconfirmed transactions under $200.
• Although the Bitcoin Cash network is based on the “UTXO” model, SLP token transactions are validated through a “DAG” model. CashTokens transactions are based on the UTXO model, providing higher efficiency when validating transactions under this standard.

These advantages, along with many others, enable CashTokens to offer a better user experience and reduce friction for self-custody wallets and commercial platforms to send and store tokens. On the other hand, CashTokens transactions pay miners fees denominated in Bitcoin Cash, so widespread adoption will ultimately help maintain the system.

CashTokens: Native Token Primitives

In the technical specification of CashTokens, the phrase “Token Primitives for Bitcoin Cash” is listed as the official name. For Spanish speakers, this phrase might be somewhat confusing, as it could mistakenly be interpreted as referring to “primitive,” simple, or limited DeFi-compatible things.

However, CashTokens are not only compatible with smart contracts written in Bitcoin Cash’s scripting language, but the term does not intend to imply simplicity. In this context, “primitives” refers to the fundamental functions of the protocol; the native features of the protocol. Therefore, a clearer translation of this concept might be “Native Tokens of Bitcoin Cash” or “Primitivas de token nativas de Bitcoin Cash.”

Update note: The original text has been corrected based on the actual implementation of Bitcoin Cash, including clarifications about token-aware addresses and the proper translation of “token primitives” as “primitivas de token” or “tokens nativos.”