Bitcoin Cash has one native token: BCH. Some people want the ability to create more tokens on Bitcoin Cash. There are many different ways to do this that have very different properties.

Motivation

It would be nice to be able to issue stocks, bonds and other financial assets on Bitcoin Cash, legal and illegal, moral and immoral, in a way that can be stored and transmitted without permission just like BCH. Furthermore, it would be nice if these assets could be traded atomically for each other and for BCH. And finally, it would be nice if we could execute smart contracts with these assets just as with BCH. We can see this done in practice on the Ethereum blockchain to great success, as well as on the Bitcoin (BTC) blockchain with Tether.

Legality

The law holds for people and companies in legal jurisdictions. Tokens can be legal or illegal or used in legal or illegal ways. People or companies who commit crimes can and often will be prosecuted and ultimately go to prison. Just as how people can commit crimes with money, they can also commit crimes with other financial instruments like stocks and bonds. However, this does not mean that the laws of any particular jurisdiction should be encoded in the protocols used to create or transmit financial instruments, similar to how SMTP (email) or HTTP (the web) do not ban message that are illegal in some jurisdictions. The law operates independently of these protocols.

Permissionlessness

Some people doubt the viability of permissionless tokens that still have a central point of failure. Consider a stock that can be freely traded amongst users, but where in order to retrieve the dividend, the owner must submit KYC information. The tokens can be traded without permission, but they cannot be redeemed without permission. That is a property of a particular token. Some tokens can be more permissioned than others. Some tokens can be completely permissionless just like BCH. That the market desires at least some fully permissionless tokens is readily seen on the Ethereum blockchain as well as with blockchains themselves such as Ethereum, Bitcoin, Bitcoin Cash, Monero, etc.

Incentives

There are good reasons to doubt the viability of tokens on Bitcoin Cash due to the incentives that keep the system secure. If miners are securing other assets but being paid in BCH, it is questionable whether the incentives are still correct to make Bitcoin Cash secure, especially if the assets become wildly more valuable than BCH itself. Should miners earn transaction fees paid in tokens as well as BCH? Whatever token system we choose, it should be convincing that miners incentives are still correct to secure the chain. Just because tokens are being used at present on Ethereum does not mean they have correct incentives - it could be that the system is doomed to failure, similar to how some insecure blockchains are not necessarily 51% attacked on launch day, but are 51% attacked some time later.

Colored Coins vs. Miner-Enforced

It is possible today to create tokens on Bitcoin Cash using colored coins protocols that are already used on Bitcoin. We do not need any protocol changes to use colored coins. In fact, colored coins on Bitcoin Cash are even easier than on Bitcoin both because the OP_RETURN data size is larger and because transaction fees are lower.
The colored coins protocols I am aware of are:
Another protocol that does not require any protocol changes to Bitcoin Cash but that isn't properly categorized as a colored coin is Tokeda. The Tokeda protocol is partially secured by miners because all transactions are normal on-chain Bitcoin Cash transactions, but the issuer must sign all transfers which means it is not fully permissionless.
GROUP is a proposal to change the consensus protocol of Bitcoin Cash to allow tokens that are fully permissionless and which can use the same smart contract system as BCH. GROUP was recently discussed by Bitcoin Cash protocol developers, but no consensus was reached about including GROUP in the next hard fork. The top criticisms of GROUP were that it was unclear whether permissionless tokens have value, whether they would be problematic for the incentives that secure the blockchain, or whether GROUP was any better than permissionless colored coins protocols that don't require changing the consensus protocol.

Money Button Inc.: A Use-Case for Tokens

We are considering making a token for the Money Button. This token would be different than most other tokens in the cryptocurrency world. If possible legally, we would like to issue our company equity in the form of a token. Technically, the company is called Yours Inc., but for marketing purposes we would rebrand to Money Button Inc.. We would issue our company equity on the Bitcoin Cash blockchain in order to raise our next round. We would give tokens in the correct amount to all existing shareholders. The token would map 1-to-1 to shares in the company. When we earned a profit, we would distribute a dividend to shareholders.
The token would satisfy these properties: The token itself could be stored and transmitted in a permissionless way that does not require a signature from the company. Dividends would be paid to all token holders. At issuance, we would probably need to do KYC, but not necessarily at transfer, and not necessarily at the time of dividend payment - these are questions for the lawyers.

References

 

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Why do you need to create tokens? What does it save you?
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   1mo ago
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to be completely honest, im not sure whats taking devs so long. a colored coin protocol like OpenAsset could be forked and deployed within a month realistically. Unfortunately we're a little preoccupied with releasing our new app, but if no one else gets it done by the time we finish our app, we'll do it! :)
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   1mo ago
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You can definitely do that in a different country, Lichtenstein has been very easy-going about security tokens. So what you could do is make a Lichtenstein company a shareholder in Yours LLC and issue only shares of the Lichtenstein company as tokens.
You can arrange a meeting at FMA (financial authority of Lichtenstein) and they will explain how it is possible (in contrast to more countries, where they tell you why you can't do it).
Another options are Liberland and Switzerland.
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   1mo ago
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Whatever token system we choose, it should be convincing that miners incentives are still correct to secure the chain. If miners are securing other assets but being paid in BCH, it is questionable whether the incentives are still correct to make Bitcoin Cash secure, especially if the assets become wildly more valuable than BCH itself.
If transferring one million dollars of Bitcoin Cash is secure then so is the transfer of a million dollar token. For a miner, there are only two valuable components to a transaction: 1) the fees and 2) the provided service.
If tokens are an off-chain system then users will interact with the issuer and their systems. This means users will value the transactions with the issuer (or off-chain system) and not the on-chain transaction. Since, in that case, miners are providing a service for the issuer they can, inclusively, use extortion by threatening to delay their token transactions. Users don't care, the issuer could have a database and avoid that extortion.
On the other hand, with on-chain tokens (miner-enforced rules), users and issuers are two parts of a system. This does not prevent issuers from having full control over transfers, and can inclusively make non-transferable tokens, but it also allows users to value token transfers (on-chain transactions) since they can interact directly with the network instead of always going through the issuer. This, in my opinion, also creates more incentives for the integration of these tokens in Bitcoin Cash wallets which greatly enhances the usability and network effect.
In short I believe miner-enforced SPV-supporting tokens to be the only interesting form of tokens. Questioning the ability to redeem a token (or is off-chain validity) is a useful as questioning the ability to buy something with Bitcoin Cash. It's something for the market to value.
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   1mo ago
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I am confused with your corporate strategy. Is yours.org meant to be just a demonstration of the technology? It seems a little weird that you would be in competition with any platform that uses moneybutton whilst the incoming platform would be chained to BCH and yours.org. If your sole product is moneybutton then it would make sense, but since you also would like yours.org to eventually become a large content platform, don't those two goals seem in conflict? I don't see any payment gateways trying to be a shop at the same time. Finally, how would you respond to those people who are a little suspicious on Craig Wright's goals, and his company seems to be a key investor in yours. Do you have control? I am a big fan of yours.org , so any clarification in your companies direction would be much appreciated. If I am misunderstanding something, I apologise in advance.
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   1mo ago
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I may be the only one who thinks differently to all those who have commented here and maybe I am wrong in my arguments but I feel that if it would be good to create a type of tokens, I will take as an example and argument the "steemit" page which uses as the main cryptocurrency Steem, Is the cryptocurrency on which Steemit is based. It is quite similar to Bitcoin, although a big difference is that the rewards are more for authors and curators than for the creators of currency or miners.

Steem's Blockchain is also the basis of other tokens: an asset called Steem dollars that is intended to always have the value of an American dollar and that is used as part of the payment to authors and curators. Steem and dollar steem can be bought and sold in the cryptocurrency market.

Speaking more about this "Steem Dollars" token: the Steem Dollar is an asset that always intends to be worth the same as an American dollar. It can be bought and sold in the cryptos market just like the Steem. On the same platform there is an integrated exchange value allowing the exchange of Steem dollars to Steem. This process usually lasts a week. The Steem Dollars will give an interest of 10% per year if they stay on the platform, but if the Steem Dollars increase in value exceeding the dollar the interest can be stopped. Conversely, if the Steem Dollars are changed to a value lower than the US dollar and the amount of them is not very high, then interest will increase. If the person chooses to convert the Steem Dollars to Steem, there will be three things that can be done with the Steem: sell it, use it as a cryptocurrency or convert it to Steem Power.

I feel that the idea of ​​Charles is good we must move forward and look towards new horizons, you have my total support, I am one of the people who would believe and support a project like the creation of BITCOIN CASH tokens.
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   1mo ago
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Greetings,

I am a newcomer who doesn't understand. Thank you for being a platform owner who cares about users by giving this explanation.
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   2wk ago
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Hello the truth, I do not understand much about it, but for the little that comes in the best is what the creation of BCH tokens, you have my support, that little by little I will learn a little more. As time goes by is that you learn and understand a little in this world of technology and cryptocurrencies
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   2d ago
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