Today (September 14, 2022) the release of the alpha version of the AnyHedge protocol was finally announced, developed by the people at General Protocols. The growth potential of AnyHedge is enormous and the peer-to-peer electronic cash community should not underestimate the efforts made by its developers, as it is perhaps one of the key pieces to achieve mass adoption of Bitcoin Cash.

Moreover, this is not a topic that is alien to me, since I have been reporting on it since the launch of Detoken, the first practical implementation of this protocol. It is something so simple, yet fascinating, that it is worth taking the time to understand again what AnyHedge is, what it is for and how it works.

I have decided to briefly write down some of the features of the current version and some ideas (that came to my mind) about this protocol.

What is AnyHedge?

Suppose we have two Bitcoin Cash users: Alan and Barbara. Alan wants to preserve the value of his bitcoins in terms of dollars (or some other asset such as gold or shares of some company). On the other hand, Barbara speculates that the price of Bitcoin Cash is going to rise, so she has an interest in increasing the potential gains in case of a rise. Or she has savings in Bitcoin Cash from which she wants to earn a return.

Well, AnyHedge is the protocol that both can use to speculate on the price of Bitcoin Cash without using intermediaries, exchanges, KYC and even without knowing each other. Alan can guarantee a certain value of Bitcoin Cash in the future and Barbara can increase her potential profit.

Through AnyHedge, both parties interact to put in the same smart contract (a special address on the Bitcoin Cash blockchain) coins that are locked for a certain period of time (which can be chosen by themselves).

How does AnyHedge work?

To understand what we are talking about, I have decided to start from the most technical basis of Bitcoin Cash: its native language.

We can think of Bitcoin as a large distributed computer whose instructions (called transactions) are processed and validated by miners around the world, who provide computing power to secure it.

Those transactions are composed of several essential elements, mainly:

• Public-private key cryptography: this is what allows users to be the ones in control of their money, since only they can produce the signatures needed to spend it.

• Scripting language: This is the -very limited- language understood by the Bitcoin transaction stack. It serves to validate the correct spending of each of the coins (also called UTXO or unspent outputs).

This is fundamental, since there is, unlike Ethereum, no global status of each of the extremely complex addresses or operations. This, on the one hand makes Bitcoin very scalable and efficient in managing network resources.

Script also enables more complex use cases than simply sending and receiving money, which is useful for different applications. The latter includes AnyHedge. To design AnyHedge it was necessary to stay within the restrictions imposed by this language and by the set of operations allowed by Bitcoin.

Testing AnyHedge

Warning! The product is still in alpha, so it is not advisable to make large transactions, but to test it with small amounts.

To test the functional product you should go to the official site. After a warning screen, where the conditions of use are mentioned, we can finally log it. It should be noted that:

• The platform does not require registration, as all the necessary information is stored locally in the browser (so I would not recommend using a browser that clears cookies from this site).

• No KYC is required. This is Bitcoin Cash, baby.

• It works with any Bitcoin Cash wallet. The platform does not provide a recovery phrase like it did with Detoken. I recommend the Electron Cash and Bitcoin.com wallets.

Finally, we are asked for a Bitcoin Cash address. We give you an address that is ours, belonging to the wallet for which you have the private key. Do not give the address of an exchange.

The main menu

The drop-down menu does not offer many options, which is good. Let us remember that Bitcoin Cash software does not have to be intended for experts, but for anyone with average computer skills to use.

In Overview are the open positions - more on this in a few moments - and History brings the history of transactions made within the platform.

The action area

Speculate and Stabilize are the options where the magic happens. If we tap on the first option, we get the following screen.

In Asset you choose the asset against which you want to predict a Bitcoin Cash price increase and the amount. US dollar, Bitcoin-BTC, Ethereum and gold are available.

Under Expires you determine how long the contract will last - before that it is not possible to withdraw or move funds - with times ranging from four hours to one week.

Finally, in Leverage you select the leverage multiplier, which ranges from 1.2 to 5.0. The platform alerts us at what price the position will be liquidated in the event of a price decline. The more leveraged you are, the more this volatility will impact you.

If you agree with the amount, you proceed to create an offer.

The site informs the position being opened, along with the premium - an amount paid to the counterparty, in this case AnyHedge, to open the contract -, and the total cost of the transaction.

To send the funds, we scan the QR code or copy the transaction data to our favorite wallet. Even a physical wallet, such as Trezor or Ledger, would work.

Once the transaction is done, the position is considered funded and there is nothing more for the user to do.

Thanks, 0-conf.

Stabilize

This is for me the most interesting option that AhyHedge allows, as it is the one that would take away the fear of those who come to Bitcoin Cash by guaranteeing them that they can safeguard the value of their assets.

The interface is practically the same and works similarly to the previous one. You choose the asset on which you want to protect value, the amount and the period of time.

Here there is no leverage, but in Protection you can choose the protection percentage. This means that if the price falls, it will cover up to that amount.

Intuitively one would think that the most logical thing to do would be to choose the highest possible protection, although this could result in a higher premium. It is a matter of testing to find a balance.

Since it is possible for a contract to terminate before the agreed period, in the event of an abrupt price movement, the balance will be discovered by traditional market mechanisms.

AnyHedge’s role in the Bitcoin Cash community

We are, once again, faced with a technology that traders, users, enthusiasts and investors can use, strengthening the use of Bitcoin Cash and increasing network activity.

• When a Bitcoin Cash user invites a trader to participate, they will only have to point to AnyHedge when they ask “what about volatility?”

• When a Bitcion-BTC user accuses Bitcoin Cash of “losing value,” AnyHedge can be shown to work to safeguard value (even in terms of BTC, if desired).

• When the grace time governments have given stablecoins runs out, there will be Bitcoin Cash alongside AnyHedge to defend users of the crypto ecosystem.

The possibilities are endless and this is just the beginning of all that may be possible, while still proving that Bitcoin Cash is a revolutionary tool that equalizes and allows us to defend our freedom and that of our community.