Inside Wormhole & # 39; s Quest to Dethrone ERC-20

Bitcoin.com CEO Roger Ver and core developer Corbin Frasers unveiled a new tool last week that allows developers to release tokens on the Bitcoin Cash blockchain, hosted in their publication.

"For better or for worse, ICO and CryptoKitties are likely to arrive in Bitcoin Cash in the near future," Fraser said jokingly, to which Ver optimistically added that "they are probably coming to Bitcoin.com", suggesting that its publication could contain an ICO based on new tokens.

This became possible with the arrival of the Wormhole protocol, which could challenge the realm of ERC-20 in the world of encrypted tokens.

What are tokens and how are they issued?

  Coins and tokens

The cryptocurrency market can be divided into two parts: coins and tokens. cryptocurrencies that have original blockchains that support the edge – the two most obvious examples would be Bitcoin (BTC) and Ethereum (ETH). Tokens, in turn, are based on pre-existing blockchains to represent a particular asset or utility.

Tokens are essential components of Initial Coin Offerings (ICO): Normally, a startup publishes a white paper for its decentralized app (DApp), holds fundraisers for fundraising, collects investments in cryptocurrencies, and distributes own tokens so that investors get their share based on their inputs.

The vast majority of tokens are built on the Ethereum network – they make up almost 83% of the entire token market, based on data obtained from ICOWatchList.

ERC-20: the definitive token model

The most popular protocol used to forge the tokens on the ETH blockchain is ERC-20, which has been proclaimed "the king of DApps" for this reason. ERC stands for Ethereum Request for Comments, and the number is the one that was assigned to this request. It was published for the first time on GitHub in November 2015 by the DApp developer for the Ethereum Fabian Vogelsteller project. Basically, the ERC-20 outlines a common list of rules that an ETH token must follow, giving developers the ability to program how the new tokens will work inside the Ethereum ecosystem – for example, to determine the total amount of tokens issued.

ERC-20 has earned its reputation using user-friendly principles and a simplified structure, which requires no advanced programming skills: YouTube is flooded with tutorials on "how to create a cryptocurrency in X minutes" and most of these suggests doing this via ERC-20. Basically, you just have to copy and paste a template from GitHub, choose a total amount of tokens, their name and symbol, pump gas and ETH and a new token was born.

Currently, there are more than 110,000 of these, as per Etherscan database. The most notable examples are EOS and TRON (TRX), which currently rank respectively in the fifth and the twelfth in terms of market capitalization. Although most ERC-20 tokens have not been applied for direct use, some of them, such as the Basic Attention (BAT) and 0x (ZRX) tokens, are still under review to be listed on major stock exchanges that comply with the law like Coinbase, despite their unclear regulatory status. Although the Ethereum itself has finally been considered "non-security" by the US Securities and Exchange Commission (SEC), ERC-20 tokens could potentially represent securities, depending on how they are marketed. Although they are inside the Ethereum ecosystem, most of them simply represent their actions in a startup.

As a result, ERC-20 played a crucial role in the 2017 ICO mania. Soon after the introduction of the protocol, the number of ICO startups in the cryptocurrency market increased significantly. Prior to this, the industry had no unified programming standards: the coins were unique and, therefore, interaction with exchanges, portfolios and other applications was significantly hampered. To ensure compatibility, a token software had to be updated every time.

 ERC-20 defects

ERC-20

However, ERC-20, being the first adopted version of the Ethereum-based protocol, has shown a number of problems and failures over time. [19659002IlpiùnotevoleèilbugbatchOverflow:inpraticaquandogliutentiinvianoaccidentalmentetokenERC-20(anzichéETH)to'&#39indirizzodiuncontrattointelligenteifondirestanointrappolatiall;internodiquelcontrattosebbenesianostatipersioltre3milionididollaridaICOipartecipantiacausadiquestascappatoiafinoadoraglisviluppatoridiERC-20continuanoachiamarlo"unerroredell'User"nonunbug

This problem led to other serious consequences for the ERC-20 token. exchanges, including OKEX, Poloniex, HitBTC and Changelly, have blocked deposits and withdrawals of all funds based on Ethereum ns, citing the aforementioned bug.

However, a number of other ERC protocols are lining up to dethrone the ERC-20 by attempting to cover its flaws or offer new features. These include ERC-223 (designed to correct ERC-20 errors), ERC-721 (which introduces collectible tokens & # 39 ;, like the famous CryptoKittens) and ERC-948 (which allows you to implement the " subscription "), among others. However, a competitor of ERC-20 came from a completely different blockchain.

Wormhole: Bitcoin Cash's response to ERC-20

So, the Roger Ver plan mentioned above is to simplify the issue of tokens on Bitcoin Cash tracks (BCH) and host them on Bitcoin.com . It should be noted that Ver is a well-known member of BCH – the Bitcoin fork that started from the original blockchain in August 2017 with the goal of positioning itself as a transactional currency. Ver was continually stating that "Bitcoin Cash is Bitcoin" through social media, citing the original white paper published years before the release of BCH. Another important supporter of the BCH, the dott. Craig Wright, recently labeled the concept of ERC-20 as a "dead end", adding that "he did not see the time to compete with Wormhole".

Wormhole is a clever update of the contract protocol for the Bitcoin Cash blockchain proposed by a team of Chinese developers led by Jiazhi Jiang. His white paper – available only in Chinese at the time – was presented in July. The development was initiated by the Bitmain encryption hardware giant, whose CEO is also a well-known supporter of BCH. In essence, the Wormhole protocol allows users to implement an intelligent contract function, just as ERC-20 does within the Ethereum network, without changing the consent rules of the Bitcoin Cash blockchain. To achieve this, use the OP_RETURN opcode based on the Omni Layer protocol.

Also supports native tokens called Wormhole Cash (WCH). These tokens are the fuel for smart contracts on the BCH blockchain and are therefore necessary for actions such as creating new tokens or listing an ICO. WCH is generated through a proof-of-burn mechanism – to get 100 WCH, a user is required to send a BCH to the burning address. At the time of printing, more than 2,300 BCHs (worth more than $ 1,200,000) were burned this way. WCH has already been recognized by CoinEx, which listed tokens on its platform on August 1st.

Politics behind Wormhole

Praising the alternative process of forgery of token based on the blockchain of BCH and moving it on Bitcoin.com seems a logical step for Roger Ver. At the beginning of August, the developer Gabriel Cardona, who created the BCH open source software developer kit (SDK) called Bitbox, introduced a Wormhole beginner guide on Bitcoin.com. There, he explains how people can use Bitcoin.com development tools to create tokens and launch an ICO using the Wormhole protocol. There are three types of tokens – that is, token with a fixed number (where the number of tokens is predetermined), tokens with a managed number (the total amount of those tokens is controlled through grant / revocation) and tokens for crowdsale / ICO (tokens that are subsequently sold to WCH during an ICO.)

For Bitmain, in turn, the fortification of the BCH ecosystem seems to be a more constrained decision. Before maintaining its IPO, the mining giant would have converted most of its savings from BTC to BCH, while the currency had an unlucky year in terms of market value.

"According to Bitmain's pre-IPO investor pool, they sold most of [Bitcoin] for [Bitcoin Cash] .At $ 900 / BCH, they bleed half a billion in the last three months," Blockback CSO Samson Mow claimed on Twitter on August 11th.

In both cases, ERC-20 has been challenged

At this point, it is unclear whether Wormhole will manage to outperform the current strength of the ICO economy, ie the ERC-20 tokens . Although WCH may not have obvious bugs like batchOverflow, some shortcomings may be revealed over time.

However, despite being a relatively new concept, Wormhole enjoys more support than another "killer" of ERC-important Ethereum 20 – that is, the ERC-223, which was introduced much earlier, in the 2017, but has not yet been widely adopted. While both have yet to receive tremendous support from their software and hardware portfolios, Wormhole has now received a convenient interface platform, making it easier to experiment with new BCH-based tokens. However, while ERC-223 is delayed, another ETH-based protocol, ERC-777, could be presented as soon as this month.

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