This is an opinion editorial by Hermann Vivier, co-founder of The Surfer Kids and Bitcoin Ekasi.
On Aug. 5 2021, Joey Olden and Luthando Ndabambi walked into JCC Camp, a township on the outskirts of Mossel Bay, South Africa. They had a mission: find a township corner store willing to sell them something for bitcoin. Their eventual success later that afternoon (when they bought two cool drinks with sats sent over the Lightning Network) could be called the moment Bitcoin Ekasi was born.
Above: Aug. 5, 2021 — Bitcoin Ekasi is born.
But the seeds that sprouted the project were sown long before. I was first introduced to Bitcoin in late 2013, following the banking crisis in Cyprus. My wife and I operate a surf-tourism business and, because she’s Russian, we’re primarily focused on the Eastern European and Russian markets. The crisis in Cyprus (along with the subsequent bailouts and related confiscation of deposits) affected many Russians and when I came across Bitcoin — thanks to a few early printed editions of Bitcoin Magazine and a friend who’d bought some on Mt. Gox — it grabbed my attention.
On March, 25, 2013, a €10 billion international bailout by the European Central Bank, International Monetary Fund and others was announced. This in return for Cyprus agreeing to close the country’s second-largest bank, the Cyprus Popular Bank, imposing a one-time levy on all uninsured deposits there and seizing around 48% of uninsured deposits in the Bank of Cyprus, the island’s largest commercial bank. A minority proportion of it was held by citizens of other countries (many of whom from Russia) and 47.5% of all bank deposits above €100,000 were seized.
Like all of us, I did not immediately understand what Bitcoin was or how it worked. I still don’t understand a lot of the finer technical details. But, it didn’t take long to realize that, whatever this thing was, if what was written in that magazine were true, those people wouldn’t have had their money arbitrarily confiscated if their money had been in self-custodied bitcoin rather than a Cypriot bank.
After having bought a little bitcoin near the top in 2013 and doing my homework when the price crashed, we started accepting bitcoin payments from surf-trip clients in mid-2015.
The first Russian and Ukrainian conflict had broken out and, as a result of sanctions, in some cases bitcoin was the only way to receive payments. On July 17, 2014, the United States extended its transactions-ban to two banks, Gazprombank and Vnesheconombank and, on Sept. 12, 2014, imposed sanctions on Russia’s largest bank, Sberbank. This affected the ability of both ordinary Ukrainains and Russians to make international transfers and, ironically, our first surf-trip bitcoin payment (in May 2015) came from Ukrainian tourists who were unable to pay as a result of sanctions against Russia.
Fast forward to late 2019. Episode 179 of the “What Bitcoin Did” podcast was my introduction to Bitcoin Beach. The idea of proactively building a circular Bitcoin economy made sense and held great appeal. If Bitcoin was to deliver on its promise, it would have to eventually be used for everyday purposes. And, doing this in a marginalized community, like El Zonte in El Salvador, seemed like a beautiful illustration of the fact that there was no practical reason it couldn’t be adopted anywhere else. It disproved so many of the common falsehoods one hears when talking about mass adoption: it’s too volatile; it’s too complex; it’s only good for criminals and drug dealers, etc., etc.
Listening to that interview with Michael Peterson, I realized that we had the platform to do something similar. So, alongside our tourism business my wife and I co-founded a small non-profit, The Surfer Kids, in 2010. It was created as a donation-based organization and the original idea was to offer tourists some insight into what life was like for 90% of South Africans, without participating in the “let’s-drive-through-the-slum” type tourism. We launched a program that taught surfing to kids specifically from impoverished areas on a weekly basis and allowed a more constructive interaction between locals and tourists. By 2019 The Surfer Kids had grown and evolved into a program serving 40 kids attending surf sessions five days a week, all year round.
In 2021 Bitcoin Magazine gave me a platform to write, which led to a podcast interview on By the Horns and, as a result, The Surfer Kids program received its first bitcoin donation in mid-2021. That was the final piece of the puzzle and the moment when the rubber really hit the road. I could envision the practical implementation of the project, now called Bitcoin Ekasi.
Link to embedded Tweet.
I approached The Surfer Kids’ coaches, specifically our Senior Coach, Luthando, and proposed the idea. He’d never heard about Bitcoin before (other than from scammers) so, first, we’d spend two months discussing Bitcoin, me trying to impart as much understanding as possible within a short space of time. Second, Luthando took that newly acquired knowledge and started talking to the owners of corner stores in the township, explaining the potential practical benefits of accepting bitcoin as payment.
He encountered a lot of resistance. Most shop owners believed (and many still do) that it’s all one giant scam. In fact, most of his time was spent not so much explaining Bitcoin, but simply demonstrating its ease of use. Mobile applications like Bitrefill, Paxful and (more recently) Azteco were invaluable in showing people that, yes, bitcoin was in fact real money. A person’s demeanor would very quickly change from skepticism to curiosity as they witnessed bitcoin — deposited into a wallet on their own phone — being used to buy mobile credit which arrived near instantaneously with Bitrefill. Or withdrawing cash from a cash machine, despite not having a bank account, with only a pin number, sent by a stranger, who was willing to buy bitcoin from them on Paxful. Shop owners were filled with disbelief when we converted vouchers, which they already stocked, into bitcoin with Azteco.
In this way Luthando onboarded our first store (Kwallos Shop, owned by Nosihle and her husband Vuyisa) in early August 2021 and at that point we began supplementing his existing fiat salary with bitcoin, which he could now spend at that store. For two months Bitcoin Ekasi remained nothing more than that. Meanwhile, I continued to educate Luthando about all things Bitcoin and he would go into the township, spend his bitcoin salary buying groceries at Kwallos and speak to other shop owners, demonstrating and explaining the practical benefits of Bitcoin.
It took about three months to onboard the second and third store owners and, in the interim, we began paying bitcoin salaries to our three junior coaches who assisted Luthando in running The Surfer Kids’ program. Up until that point, two of them had been volunteering/working as apprentices, with the hope that we’d eventually be able to afford a salary for them.
The third Junior Coach, Lukhangele, (17) the most senior of the three junior coaches, had been earning his salary in cash. He was (and still is) unable to open a bank account because of a clerical mistake on his birth certificate; his cash salary was often forcibly taken by older family members who used it for their own dubious purposes. Getting paid in bitcoin was an interesting shift for him as he experienced having full control over his own money for the first time. Storing money in a bitcoin wallet, protected by a password, changed the family dynamic. He’s the oldest sibling in the household and he’s the big brother in a fatherless household. Despite still being a school-kid, his salary (of about $150/month) was the single biggest regular household contribution, with the rest of the family mostly relying on social grants and intermittent casual work. Bitcoin put him in the position where he could decide what — and when — he would contribute to the household.
Above – The Surfer Kids Junior Coach – Lukhangele
These sorts of experiences and practical use cases energized me because for the first time I personally witnessed a very real-world impact of what bitcoin could do in someone else’s life. I had experienced it in my own life, but actually seeing financial empowerment happening in front of my own eyes, expanded my perspective on what’s possible with bitcoin. The meme “Bitcoin fixes this” suddenly became real, as I saw it affecting seemingly unrelated social issues in positive ways.
And the more I experienced this, the more motivated I became to drive this project forward as far as possible — because it’s one thing to believe that Bitcoin can change the world, but to see it and experience it right in front of me, that really lit the orange fire inside of me.
It was around that time when some momentum started building, both on the ground and on our Bitcoin Twitter profile, that Michael Peterson contacted me and offered the support of Bitcoin Beach. His idea was to turn Bitcoin Beach into a global movement whereby they support similar projects but allow them to build and grow in their own unique ways. This speaks to the decentralization of Bitcoin itself and stands in stark contrast to the world of fiat donations/funding where, in my experience, many donors expect an unrealistic level of influence and control when donating to an NPO.
Thanks to their support we’ve been able to extend our impact by doing some very exciting things, like launching our kids’ rewards program, appointing a full-time Bitcoin educator in our community, providing shop owners with Bitcoin signage, employing full-time lifeguards to patrol our beaches and prevent drownings and appointing an additional Senior Coach, Akhona, to help Luthando drive this project with more boots on the ground.
In addition, we are now providing staff uniforms to our expanded team of coaches and lifeguards, all of whom earn 100% of their salary in bitcoin and spend it buying groceries from shops we have onboarded.
Above: Left to Right — Good Morning Shop (Michael), Good Hope Shop and Isinyoka Shop
The ultimate question, I guess, is, “Why do this?”
If you’re a Bitcoiner, you know why. But it’s my hope that regular people also read this and look at projects like ours and Bitcoin Beach and feel inspired to think deeper and further about the implications of Bitcoin on communities in South Africa and the Global South.
There are two reasons why I’m doing this. First, to support and expand upon the original aim of the The Surfer Kids’ program, which has always been about personal empowerment.
As a recovering addict there is one thing I understand very well, and that’s the fact that change must come from within. The best way to help another is to show them how to help themselves. Anything else creates dependency and, more often than not, has negative long-term side effects.
And so The Surfer Kids’ emphasis has always been on teaching the kids the value of commitment to long-term goals. As that’s the way for an individual to empower themselves: commit to something and stick with it, no matter what. Surfing is fun but inherently difficult to learn and, like Bitcoin, teaches perseverance.
However, operating The Surfer Kids for more than a decade, it’s always felt like a drop in the bucket. There are thousands of people living under horrifying circumstances in that township, and that’s just one of thousands of townships — in this country alone. And we only serve 40 kids.
Introducing Bitcoin as a tool for personal and financial empowerment could, like it did in El Zonte, create a ripple effect in our community. And I’ve already seen that happen in numerous interesting and exciting ways. Those who dismiss the idea that Bitcoin changes a person’s mindset and attitude are either not paying attention, have not experienced the effect firsthand in their own lives and/or have never seen it happen in someone else’s life.
Second, as mentioned earlier, this is another proof of concept. There are very few places in the world where people live under more desperate circumstances than townships such as this one. Unemployment is astronomically high. Illiteracy is rife. Most homes are in fact informal structures built from scrap material and the majority have neither running water inside their home, nor toilets or warm water.
If Bitcoin can work here and be organically adopted in a setting such as this, there’s no reason why it couldn’t be adopted anywhere else. I’d understand if an upper middle class person told me they’d prefer not to use it, for no particular reason other than preference. But don’t tell me it’s because it’s too complex or volatile. If it’s being adopted (voluntarily and with no incentive other than the utility it has to offer) in the circumstances that we’ve described here, then why not anywhere else? And everywhere else?
The fact of the matter is, those are all just excuses. People will adopt it when they need it. When they have no other choice left, bitcoin will no longer be “too complex,” “too volatile” or “only good for criminals and drug dealers.”
And that’s really been the most beautiful thing about this experience. The people whom we’ve seen adopting bitcoin, in the township, have not done so for ideological or philosophical reasons. They don’t care about our Twitter debates. We’ve seen bitcoin being adopted simply because, unlike the rest of society for whom the current system still works relatively fine, for many in this township community Bitcoin is, in many respects, simply the best available option. A personal path to greater freedom and personal responsibility is being learned, one South African at a time.
And when (not if) the current status quo fails or when there’s a major sovereign default or reserve currency crisis, those skeptics who don’t yet see its utility will begin to understand. It is only at that point where they will begin to strongly consider adopting bitcoin.
Essentially, we’re helping to get the lifeboat ready before the ship goes down. Because by the time it does go down, the lifeboat must be sailing.
This is a guest post by Hermann Vivier. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
El Salvador Takes First Step To Issue Bitcoin Volcano Bonds
El Salvador’s Minister of the Economy Maria Luisa Hayem Brevé submitted a digital assets issuance bill to the country’s legislative assembly, paving the way for the launch of its bitcoin-backed “volcano” bonds.
First announced one year ago today, the pioneering initiative seeks to attract capital and investors to El Salvador. It was revealed at the time the plans to issue $1 billion in bonds on the Liquid Network, a federated Bitcoin sidechain, with the proceedings of the bonds being split between a $500 million direct allocation to bitcoin and an investment of the same amount in building out energy and bitcoin mining infrastructure in the region.
A sidechain is an independent blockchain that runs parallel to another blockchain, allowing for tokens from that blockchain to be used securely in the sidechain while abiding by a different set of rules, performance requirements, and security mechanisms. Liquid is a sidechain of Bitcoin that allows bitcoin to flow between the Liquid and Bitcoin networks with a two-way peg. A representation of bitcoin used in the Liquid network is referred to as L-BTC. Its verifiably equivalent amount of BTC is managed and secured by the network’s members, called functionaries.
“Digital securities law will enable El Salvador to be the financial center of central and south America,” wrote Paolo Ardoino, CTO of cryptocurrency exchange Bitfinex, on Twitter.
Bitfinex is set to be granted a license in order to be able to process and list the bond issuance in El Salvador.
The bonds will pay a 6.5% yield and enable fast-tracked citizenship for investors. The government will share half the additional gains with investors as a Bitcoin Dividend once the original $500 million has been monetized. These dividends will be dispersed annually using Blockstream’s asset management platform.
The act of submitting the bill, which was hinted at earlier this year, kickstarts the first major milestone before the bonds can see the light of day. The next is getting it approved, which is expected to happen before Christmas, a source close to President Nayib Bukele told Bitcoin Magazine. The bill was submitted on November 17 and presented to the country’s Congress today. It is embedded in full below.
How I’ll Talk To Family Members About Bitcoin This Thanksgiving
This is an opinion editorial by Joakim Book, a Research Fellow at the American Institute for Economic Research, contributor and copy editor for Bitcoin Magazine and a writer on all things money and financial history.
That’s it. That’s the article.
In all sincerity, that is the full message: Just don’t do it. It’s not worth it.
You’re not an excited teenager anymore, in desperate need of bragging credits or trying out your newfound wisdom. You’re not a preaching priestess with lost souls to save right before some imminent arrival of the day of reckoning. We have time.
Instead: just leave people alone. Seriously. They came to Thanksgiving dinner to relax and rejoice with family, laugh, tell stories and zone out for a day — not to be ambushed with what to them will sound like a deranged rant in some obscure topic they couldn’t care less about. Even if it’s the monetary system, which nobody understands anyway.
If you’re not convinced of this Dale Carnegie-esque social approach, and you still naively think that your meager words in between bites can change anybody’s view on anything, here are some more serious reasons for why you don’t talk to friends and family about Bitcoin the protocol — but most certainly not bitcoin, the asset:
- Your family and friends don’t want to hear it. Move on.
- For op-sec reasons, you don’t want to draw unnecessary attention to the fact that you probably have a decent bitcoin stack. Hopefully, family and close friends should be safe enough to confide in, but people talk and that gossip can only hurt you.
- People find bitcoin interesting only when they’re ready to; everyone gets the price they deserve. Like Gigi says in “21 Lessons:”
“Bitcoin will be understood by you as soon as you are ready, and I also believe that the first fractions of a bitcoin will find you as soon as you are ready to receive them. In essence, everyone will get ₿itcoin at exactly the right time.”
It’s highly unlikely that your uncle or mother-in-law just happens to be at that stage, just when you’re about to sit down for dinner.
- Unless you can claim youth, old age or extreme poverty, there are very few people who genuinely haven’t heard of bitcoin. That means your evangelizing wouldn’t be preaching to lost, ignorant souls ready to be saved but the tired, huddled and jaded masses who could care less about the discovery that will change their societies more than the internal combustion engine, internet and Big Government combined. Big deal.
- What is the case, however, is that everyone in your prospective audience has already had a couple of touchpoints and rejected bitcoin for this or that standard FUD. It’s a scam; seems weird; it’s dead; let’s trust the central bankers, who have our best interest at heart.
No amount of FUD busting changes that impression, because nobody holds uninformed and fringe convictions for rational reasons, reasons that can be flipped by your enthusiastic arguments in-between wiping off cranberry sauce and grabbing another turkey slice.
- It really is bad form to talk about money — and bitcoin is the best money there is. Be classy.
Now, I’m not saying to never ever talk about Bitcoin. We love to talk Bitcoin — that’s why we go to meetups, join Twitter Spaces, write, code, run nodes, listen to podcasts, attend conferences. People there get something about this monetary rebellion and have opted in to be part of it. Your unsuspecting family members have not; ambushing them with the wonders of multisig, the magically fast Lightning transactions or how they too really need to get on this hype train, like, yesterday, is unlikely to go down well.
However, if in the post-dinner lull on the porch someone comes to you one-on-one, whisky in hand and of an inquisitive mind, that’s a very different story. That’s personal rather than public, and it’s without the time constraints that so usually trouble us. It involves clarifying questions or doubts for somebody who is both expressively curious about the topic and available for the talk. That’s rare — cherish it, and nurture it.
Last year I wrote something about the proper role of political conversations in social settings. Since November was also election month, it’s appropriate to cite here:
“Politics, I’m starting to believe, best belongs in the closet — rebranded and brought out for the specific occasion. Or perhaps the bedroom, with those you most trust, love, and respect. Not in public, not with strangers, not with friends, and most certainly not with other people in your community. Purge it from your being as much as you possibly could, and refuse to let political issues invade the areas of our lives that we cherish; politics and political disagreements don’t belong there, and our lives are too important to let them be ruled by (mostly contrived) political disagreements.”
If anything, those words seem more true today than they even did then. And I posit to you that the same applies for bitcoin.
Everyone has some sort of impression or opinion of bitcoin — and most of them are plain wrong. But there’s nothing people love more than a savior in white armor, riding in to dispel their errors about some thing they are freshly out of fucks for. Just like politics, nobody really cares.
Leave them alone. They will find bitcoin in their own time, just like all of us did.
This is a guest post by Joakim Book. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
RGB Magic: Client-Side Contracts On Bitcoin
This is an opinion editorial by Federico Tenga, a long time contributor to Bitcoin projects with experience as start-up founder, consultant and educator.
The term “smart contracts” predates the invention of the blockchain and Bitcoin itself. Its first mention is in a 1994 article by Nick Szabo, who defined smart contracts as a “computerized transaction protocol that executes the terms of a contract.” While by this definition Bitcoin, thanks to its scripting language, supported smart contracts from the very first block, the term was popularized only later by Ethereum promoters, who twisted the original definition as “code that is redundantly executed by all nodes in a global consensus network”
While delegating code execution to a global consensus network has advantages (e.g. it is easy to deploy unowed contracts, such as the popularly automated market makers), this design has one major flaw: lack of scalability (and privacy). If every node in a network must redundantly run the same code, the amount of code that can actually be executed without excessively increasing the cost of running a node (and thus preserving decentralization) remains scarce, meaning that only a small number of contracts can be executed.
But what if we could design a system where the terms of the contract are executed and validated only by the parties involved, rather than by all members of the network? Let us imagine the example of a company that wants to issue shares. Instead of publishing the issuance contract publicly on a global ledger and using that ledger to track all future transfers of ownership, it could simply issue the shares privately and pass to the buyers the right to further transfer them. Then, the right to transfer ownership can be passed on to each new owner as if it were an amendment to the original issuance contract. In this way, each owner can independently verify that the shares he or she received are genuine by reading the original contract and validating that all the history of amendments that moved the shares conform to the rules set forth in the original contract.
This is actually nothing new, it is indeed the same mechanism that was used to transfer property before public registers became popular. In the U.K., for example, it was not compulsory to register a property when its ownership was transferred until the ‘90s. This means that still today over 15% of land in England and Wales is unregistered. If you are buying an unregistered property, instead of checking on a registry if the seller is the true owner, you would have to verify an unbroken chain of ownership going back at least 15 years (a period considered long enough to assume that the seller has sufficient title to the property). In doing so, you must ensure that any transfer of ownership has been carried out correctly and that any mortgages used for previous transactions have been paid off in full. This model has the advantage of improved privacy over ownership, and you do not have to rely on the maintainer of the public land register. On the other hand, it makes the verification of the seller’s ownership much more complicated for the buyer.
How can the transfer of unregistered properties be improved? First of all, by making it a digitized process. If there is code that can be run by a computer to verify that all the history of ownership transfers is in compliance with the original contract rules, buying and selling becomes much faster and cheaper.
Secondly, to avoid the risk of the seller double-spending their asset, a system of proof of publication must be implemented. For example, we could implement a rule that every transfer of ownership must be committed on a predefined spot of a well-known newspaper (e.g. put the hash of the transfer of ownership in the upper-right corner of the first page of the New York Times). Since you cannot place the hash of a transfer in the same place twice, this prevents double-spending attempts. However, using a famous newspaper for this purpose has some disadvantages:
- You have to buy a lot of newspapers for the verification process. Not very practical.
- Each contract needs its own space in the newspaper. Not very scalable.
- The newspaper editor can easily censor or, even worse, simulate double-spending by putting a random hash in your slot, making any potential buyer of your asset think it has been sold before, and discouraging them from buying it. Not very trustless.
For these reasons, a better place to post proof of ownership transfers needs to be found. And what better option than the Bitcoin blockchain, an already established trusted public ledger with strong incentives to keep it censorship-resistant and decentralized?
If we use Bitcoin, we should not specify a fixed place in the block where the commitment to transfer ownership must occur (e.g. in the first transaction) because, just like with the editor of the New York Times, the miner could mess with it. A better approach is to place the commitment in a predefined Bitcoin transaction, more specifically in a transaction that originates from an unspent transaction output (UTXO) to which the ownership of the asset to be issued is linked. The link between an asset and a bitcoin UTXO can occur either in the contract that issues the asset or in a subsequent transfer of ownership, each time making the target UTXO the controller of the transferred asset. In this way, we have clearly defined where the obligation to transfer ownership should be (i.e in the Bitcoin transaction originating from a particular UTXO). Anyone running a Bitcoin node can independently verify the commitments and neither the miners nor any other entity are able to censor or interfere with the asset transfer in any way.
Since on the Bitcoin blockchain we only publish a commitment of an ownership transfer, not the content of the transfer itself, the seller needs a dedicated communication channel to provide the buyer with all the proofs that the ownership transfer is valid. This could be done in a number of ways, potentially even by printing out the proofs and shipping them with a carrier pigeon, which, while a bit impractical, would still do the job. But the best option to avoid the censorship and privacy violations is establish a direct peer-to-peer encrypted communication, which compared to the pigeons also has the advantage of being easy to integrate with a software to verify the proofs received from the counterparty.
This model just described for client-side validated contracts and ownership transfers is exactly what has been implemented with the RGB protocol. With RGB, it is possible to create a contract that defines rights, assigns them to one or more existing bitcoin UTXO and specifies how their ownership can be transferred. The contract can be created starting from a template, called a “schema,” in which the creator of the contract only adjusts the parameters and ownership rights, as is done with traditional legal contracts. Currently, there are two types of schemas in RGB: one for issuing fungible tokens (RGB20) and a second for issuing collectibles (RGB21), but in the future, more schemas can be developed by anyone in a permissionless fashion without requiring changes at the protocol level.
To use a more practical example, an issuer of fungible assets (e.g. company shares, stablecoins, etc.) can use the RGB20 schema template and create a contract defining how many tokens it will issue, the name of the asset and some additional metadata associated with it. It can then define which bitcoin UTXO has the right to transfer ownership of the created tokens and assign other rights to other UTXOs, such as the right to make a secondary issuance or to renominate the asset. Each client receiving tokens created by this contract will be able to verify the content of the Genesis contract and validate that any transfer of ownership in the history of the token received has complied with the rules set out therein.
So what can we do with RGB in practice today? First and foremost, it enables the issuance and the transfer of tokenized assets with better scalability and privacy compared to any existing alternative. On the privacy side, RGB benefits from the fact that all transfer-related data is kept client-side, so a blockchain observer cannot extract any information about the user’s financial activities (it is not even possible to distinguish a bitcoin transaction containing an RGB commitment from a regular one), moreover, the receiver shares with the sender only blinded UTXO (i. e. the hash of the concatenation between the UTXO in which she wish to receive the assets and a random number) instead of the UTXO itself, so it is not possible for the payer to monitor future activities of the receiver. To further increase the privacy of users, RGB also adopts the bulletproof cryptographic mechanism to hide the amounts in the history of asset transfers, so that even future owners of assets have an obfuscated view of the financial behavior of previous holders.
In terms of scalability, RGB offers some advantages as well. First of all, most of the data is kept off-chain, as the blockchain is only used as a commitment layer, reducing the fees that need to be paid and meaning that each client only validates the transfers it is interested in instead of all the activity of a global network. Since an RGB transfer still requires a Bitcoin transaction, the fee saving may seem minimal, but when you start introducing transaction batching they can quickly become massive. Indeed, it is possible to transfer all the tokens (or, more generally, “rights”) associated with a UTXO towards an arbitrary amount of recipients with a single commitment in a single bitcoin transaction. Let’s assume you are a service provider making payouts to several users at once. With RGB, you can commit in a single Bitcoin transaction thousands of transfers to thousands of users requesting different types of assets, making the marginal cost of each single payout absolutely negligible.
Another fee-saving mechanism for issuers of low value assets is that in RGB the issuance of an asset does not require paying fees. This happens because the creation of an issuance contract does not need to be committed on the blockchain. A contract simply defines to which already existing UTXO the newly issued assets will be allocated to. So if you are an artist interested in creating collectible tokens, you can issue as many as you want for free and then only pay the bitcoin transaction fee when a buyer shows up and requests the token to be assigned to their UTXO.
Furthermore, because RGB is built on top of bitcoin transactions, it is also compatible with the Lightning Network. While it is not yet implemented at the time of writing, it will be possible to create asset-specific Lightning channels and route payments through them, similar to how it works with normal Lightning transactions.
RGB is a groundbreaking innovation that opens up to new use cases using a completely new paradigm, but which tools are available to use it? If you want to experiment with the core of the technology itself, you should directly try out the RGB node. If you want to build applications on top of RGB without having to deep dive into the complexity of the protocol, you can use the rgb-lib library, which provides a simple interface for developers. If you just want to try to issue and transfer assets, you can play with Iris Wallet for Android, whose code is also open source on GitHub. If you just want to learn more about RGB you can check out this list of resources.
This is a guest post by Federico Tenga. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.