Prior Art & Alternatives
Prior art and alternative token systems are reviewed below.
The CashTokens CHIP builds on ideas behind PMv3 (2021), a version 3 transaction format proposal for Bitcoin Cash. The CashToken primitives were identified and extracted from covenant applications designed for PMv3 transactions (see PMv3-Based CashTokens), and the PMv3 proposal has been withdrawn in favor of CashTokens.
Bitauth (2016) is an identity resolution and message authentication protocol which uses transactions to define and update the public claims and signing requirements of identities. CashTokens' use of Transaction IDs as Token Category IDs is derived from Bitauth's identity resolution strategy, and the transferability of CashTokens' minting and mutable capabilities is derived from Bitauth's migration transactions (differing from earlier colored coin proposals that associated capabilities with fixed public keys or contract hashes).
CashTokens offer some functionality similar to (and compatible with) Bitauth: Bitauth could be extended to allow the representation of identities with non-fungible tokens, reducing client validation requirements and preventing outdated wallets from inadvertently destroying Bitauth identities. While marking a particular identity with an NFT would negatively impact privacy (by reducing its anonymity set from all unspent outputs to only unspent outputs with compatible NFTs), the identity would also become usable with on-chain entities.
Strategies for representing and managing new types of assets, beyond the Bitcoin Cash currency, on the Bitcoin Cash blockchain are generally referred to as colored coin systems. Colored coin proposals appeared shortly after the initial release of Bitcoin, some as exclusively application-layer protocols and some including proposed consensus changes. Ordered by date proposed, these include: Mastercoin, Order-Based Coloring, OP_CHECKCOLORVERIFY, Freimarkets, Open Assets, EPOBC, Colu, Confidential Assets, OP_GROUP, Group Tokenization, SLPv1, and Unforgeable Groups.
Previous colored coin proposals focus primarily on support for fungible tokens; proposals that make provisions for non-fungible tokens implement them as a fungible token category with a supply of 1 (Freimarkets, Open Assets, EPOBC, Colu, Group Tokenization, SLP, Unforgeable Groups). This approach typically fails to enable contract-issued commitments and offers limited token-related functionality to contracts.
CashTokens differs from previous colored coin proposals in that CashTokens identifies byte-string commitments ("non-fungible tokens") as the core primitive required for advanced decentralized application development, and CashTokens identifies numeric commitments ("fungible tokens") as a valuable but incompatible specialization of byte-string commitments. These primitives are natural extensions of the existing Bitcoin Cash contracting system, enabling more advanced contract designs without impacting transaction or block validation costs.
OP_CHECKCOLORVERIFY (2013) was a proposal to redefine
OP_NOP3 to verify that a transaction could not counterfeit the "coloring" of satoshis (the smallest unit of the network's native currency). Satoshis would acquire a color via a minting protocol, and future minting would be controlled by the locking bytecode hashed to derive the color's identifier.
OP_CHECKCOLORVERIFY was similar to CashTokens in its VM-focused approach to supporting fungible tokens. However, OP_CHECKCOLORVERIFY token units would have used satoshis, so the use of tokens would carry an unnecessary opportunity cost in lost monetary time value. Additionally, OP_CHECKCOLORVERIFY would not have enabled cross-contract interfaces or composable, decentralized applications.
Freimarkets (2013) was a set of proposed changes for Bitcoin-like currencies which would enable fungible tokens and many use cases of fungible tokens: token interest/demurrage, atomic token exchanges, on-chain order matching, on-chain auctions, on-chain options, collectable NFTs, and several off-chain token usage strategies. Freimarkets included a new transaction format, transaction expiration, IEEE 754-2008 decimal floating point output amounts, arbitrary precision arithmetic, output "asset tags" (a 20-byte hash of the genesis transaction which created the asset type), sub-transactions, an "authorizer" subsystem for authorizing or charging fees on token transactions, a "validation script" subsystem (run when the block including a transaction is verified), a system for sidechain-like private ledgers, and a variety of new opcodes (
While many use cases for CashTokens could have been implemented with minor modifications to Freimarkets, contract constructions under Freimarkets would have been less efficient in terms of transaction size (requiring asset tag preimage inspection). Additionally, the magnitude of proposed changes presented an obstacle to deployment and adoption, and several components exposed the network to new attack vectors that require further analysis (arithmetic changes, transaction expiration, "authorizer" subsystem, "validation script" subsystem, opcode exposure of global state).
Confidential Assets (2017) is a proposed upgrade for bitcoin-like cryptocurrencies which blinds the amounts of all UTXOs and adds support for issuing and managing assets with blinded identifiers ("asset tags") and amounts. The Confidential Assets proposal requires a new transaction format (with increased transaction sizes), additional cryptographic algorithms not currently in use by the protocol, and blinding of on-chain UTXO information.
CashTokens differs from Confidential Assets in that CashTokens enables cross-contract interfaces and composable, decentralized applications; Confidential Assets focuses primarily on representation of off-chain assets and cannot support covenant applications without additional upgrades. Additionally, CashTokens maintains the unblinded public auditability of all on-chain assets, while Confidential Assets makes public auditability more complex and reliant on the intractability of the discrete logarithm problem.
OP_GROUP (2017) was a proposal to redefine
OP_NOP4 to verify that a transaction could not counterfeit the "coloring" of satoshis. Satoshis would acquire a color via a minting protocol, and future minting would be controlled by the public key used to derive the color's identifier. CashTokens differs from OP_GROUP in the same ways that CashTokens differs from OP_CHECKCOLORVERIFY.
Group Tokenization (2018, 2021) is a set of proposals to support colored coins and extend the contract system of bitcoin-like cryptocurrencies. Group Tokenization expands on the earlier
OP_GROUP proposal by migrating from satoshi coloring to unlimited minting, and it introduces authorities, capabilities (mint, melt, baton, rescript, and subgroup), authority migration transactions, a new subsystem for "script templates"/covenants, "subgroups", and a new transaction format. It also outlines research directions for new opcodes:
OP_EXEC (similar to
CashTokens differs from Group Tokenization in that CashTokens enables cross-contract interfaces and composable, decentralized applications. While many CashTokens use cases could be implemented with the addition of token inspection operations to Group Tokenization, contract constructions under Group Tokenization would be more complex and less efficient in terms of transaction size (due to lack of non-fungible token primitive, genesis transaction hashing requirement, usage of subgroups to emulate commitments, lack of mutable tokens, and unlimited fungible token minting). Additionally, the magnitude of proposed changes present an obstacle to deployment and adoption, and several components require further specification and analysis (script template subsystem, issuer control of melt capability, new transaction format).
Simple Ledger Protocol (v1)
Simple Ledger Protocol (SLP) version 1 (2018) is the most widespread application-layer token system on Bitcoin Cash. SLP uses strictly formatted data carrier outputs (
OP_RETURN outputs) to associate tokens with particular transaction outputs. SLP also includes a non-fungible token standard (SLP NFT1, 2019).
The SLP-related contents of SLP transactions are not validated by the network, so SLP clients require an SLP-compatible indexing server and significant client-side validation (though trust-minimized, light-wallet validation is possible).
CashTokens differs from SLP in that CashTokens are validated by the network, and the CashToken primitives enable cross-contract interfaces and composable, decentralized applications. Additionally, SLP offers a complete token standard, including extensive implementation recommendations, best practices, and tooling. By design, the CashTokens CHIP specifies only the upgrade required to enable the CashToken primitives on Bitcoin Cash. Future specifications can incorporate CashTokens into more complete, application-specific standards.
Unforgeable Groups is a colored coin proposal which was derived from the earlier Group Tokenization proposal. CashTokens uses the output prefix codepoint strategy from Unforgeable Groups to ensure backwards-compatibility of token encoding (obviating the need for a new transaction format). At publication, CashTokens differed from Unforgeable Groups v6 in that CashTokens enables cross-contract interfaces and composable, decentralized applications; Unforgeable Groups has since been updated to recommend the CashTokens primitives.