Intro to Bitcoin Cash
Bitcoin Cash (ticker BCH) is one of the biggest cryptocurrencies. Bitcoin Cash is a fork of Bitcoin started in 2017 because of differences in vision for the future of the Bitcoin project.
Bitcoin Cash shares many of the same fundamentals as Bitcoin (BTC) like the Proof-of-Work consensus algorithm and the UTXO data-model. However regarding smart contract programmability, Bitcoin Cash has significantly diverged from Bitcoin (BTC). We will first cover the UTXO data model and then delve into the smart contract capabilities of Bitcoin Cash.
To learn more about the Bitcoin Basics refer to the book 'Mastering Bitcoin'. There is also a modified version for BCH specifically called 'Mastering Bitcoin Cash'.
UTXO model
Bitcoin Cash transactions work with in- and outputs. All current balances are so called Unspent Transaction Outputs (UTXOs), which simply means they can be used as inputs for future spending transactions.
When UTXOs are used as inputs to a Bitcoin Cash transaction, they produce new UTXOs as outputs. UTXOs are fully 'consumed' or 'destroyed' when used in a transaction. So whenever the user wishes to use a 10 BCH UTXO to send someone 1 BCH, they need to add an output to send 9 BCH back to themselves. Realistically, part of the funds would be reserved for transaction fees as well.
UTXOs are locked using a locking script that specifies the conditions to spend the UTXO. When attempting to spend a UTXO, an unlocking script is provided. These scripts are then executed together and the transaction is only valid if the scripts execute without errors and the evaluation result is TRUE.
P2PKH transactions
The most used locking/unlocking script pattern is called Pay-to-Public-Key-Hash (P2PKH), where the locking script contains the hash of a public key and expects the unlocking script to contain a public key and transaction signature. The locking script then checks that the provided public key matches the stored hash, and that the transaction signature is valid.
The P2PKH pattern is used in regular Bitcoin Cash wallets. These wallets only know how to spend from inputs with this pattern, where the public-key-hash in question is the owners' public key. The user's wallet balance then is simply the sum of all UTXOs that can be spent by the user's public keys.
Smart Contracts on BCH
Smart contracts on Bitcoin Cash also use this same locking/unlocking model. The most used locking/unlocking for smart contracts is called Pay-to-Script-Hash (P2SH) with two variants depending on the length of the script-hash: P2SH20 and P2SH32. The 'script' contains the arbitrary code logic written by smart contract authors!
Bitcoin Cash has had many script upgrades, including transaction introspection and CashTokens. Because of these upgrades, DeFi is very much possible on Bitcoin Cash. However, compared to EVM, smart contracts work very differently due to BCH's UTXO architecture.
Smart contracts on Bitcoin Cash only have access to the current transaction context, which enables 'local state'. This model allows transactions to be verified independently and efficiently. Because there is no global state that can impact the execution of these smart contracts, the results are deterministic and predictable.
The UTXO model where transactions only have access to the local transaction context enables parallel transaction validation and is the reason why Bitcoin Cash is hugely scalable!
Bitcoin Cash Script
The locking and unlocking scripts of regular transactions and smart contracts on Bitcoin Cash are written using Bitcoin Cash' transaction scripting language, referred to as BCH Script (or Bitcoin Cash Script in full). BCH Script is a stack based assembly-like language, because it is a low-level language and requires stack management it is hard to write complex smart contract in Script directly.
CashScript
CashScript is a high-level programming language for smart contracts on Bitcoin Cash that offers a strong abstraction for a smoother development experience. CashScript fully abstracts the management of items on the 'stack' from developers, allowing them to focus on their application logic instead of low-level details.
The CashScript syntax is based on Ethereum's smart contract language Solidity, but its functionality is very different since smart contracts on Bitcoin Cash differ greatly from smart contracts on Ethereum.
