CashTokens Launch on Bitcoin Cash with New Network Upgrade
The Bitcoin Cash network has undergone a mainnet upgrade that allows developers to issue tokens atop the network. The tokens, dubbed “CashTokens,” can be issued by anyone and are similar to the recently-launched Bitcoin Request for Comment (BRC20) tokens.
BCH Upgrade Brings Support for CashTokens and DeFi Applications
On Monday, Bitcoin Cash underwent a mainnet upgrade, completed at the block height of 792,772. The new update includes support for CashTokens, BCH developer Jason Dreyzehner noted, adding that it could be a “tool for expanding financial access.”
“CashTokens are digital assets with the censorship-resistant, peer-to-peer, low-fee properties of Bitcoin Cash,” Dreyzehner explained. He added that anyone could issue these tokens, representing physical assets or serving as currencies, payment stablecoins, commodities, securities, and more.
Notably, CashTokens introduce two different types of tokens to Bitcoin Cash. The first is non-fungible tokens, allowing NFTs to be created, traded, and transferred on the blockchain. The second is fungible tokens, which will enable tokenizing of any asset on the network.
Moreover, the upgrade brings smart contracts functionality to Bitcoin Cash, which could allow Bitcoin Cash-based applications like decentralized exchanges, lending and borrowing platforms, and other DeFi protocols.
“The underlying technology also enables far more advanced on-chain applications like higher-security vaults, decentralized exchanges (DEXs), and bridged sidechains. E.g. an auction DEX.”
The upgrade also introduces features like future-proof multiparty vaults and technical improvements for transaction validation. Specifically, the update reduces transaction sizes within the blockchain, which could help speed up transactional times.
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CashTokens Update Comes as BRC20 Tokens Surge in Popularity
While the CashTokens concept was proposed in late 2022 before Ordinals became a hot topic, their arrival timing is ideal. There has been a sharp spike in interest in Ordinals and BRC20 tokens, which allow developers to issue tokens and DeFi applications natively on Bitcoin.
More than 7 million Ordinals have been inscribed to the Bitcoin network since the launch of the protocol earlier this year, according to a Dune dashboard. Similarly, BRC-20 tokens surpassed a $1 billion market capitalization last week, driven by the exponential growth of tokens like Ordi (ORDI), Nals (NALS), VMPX (VMPX), and Pepecoin (PEPE).
However, the success of Ordinals and BRC20 tokens has resulted in a clogged mempool and skyrocketing transaction fees. At one point last week, around 500,000 unconfirmed Bitcoin transactions in the mempool were waiting to be added to a block.
That is why some Bitcoin core developers have suggested releasing an upgrade to kill Ordinals. Critics also believe that on-chain token trading is counterproductive to Bitcoin’s aspirations as a monetary network.
Nevertheless, the recent upgrade has failed to impact the price of BCH, the native token of Bitcoin Cash. While the token experienced a short-lived rally from $114 to a high of $120 on Monday after the update, it has since yielded all the gains. At the time of writing, BCH is trading at $115.95, down by 2.3% over the past day.
Do you think Bitcoin Cash’s CashTokens could gain comparable popularity to Ordinals or BRC20 tokens? Let us know in the comments below.