Crypto
How Replacing Reality With Fiat Falsehoods Destroys Meaning
This is an opinion editorial by Jimmy Song, a Bitcoin developer, educator and entrepreneur and programmer with over 20 years of experience.
Link to audio read of the article.
We’re being robbed of our dreams.
Remember when you were little and wanted to grow up and do something great? You wanted to change the world for good and make a real difference. Yet, as you grew older, the realities of the fiat economy, particularly fiat companies, changed your goals. You dismissed your youthful desires as the unrealistic visions of an immature child and decided that the grim realities of the “real” world wouldn’t allow for such fanciful dreams.
Instead, you pursue the next promotion, the bigger car, the nicer house — something just incrementally better than what you already have. You’ve succumbed to the trinkets the fiat system dangles in front of you. Is this all that life is? To pursue the minor wins in a meaningless game rather than the dreams of your more idealistic self? You pursue what will give a little more status from a group of people you don’t particularly like and work yourself to death for it. You realize that what will give meaning to your life has not been a consideration for some time and that the rat race has exhausted you to the point where pondering such things seems like a burden itself. Better to indulge in video games or porn or social media and distract yourself.
People pursue the fiat things because they seem to be the only things realistic for them to get. They rationalize that they are pursuing something good, even if it’s really rent-seeking in the worst way. Your dreams have not been so much altered as they have been debased. Not to spoil things too much, but the debasement of your dreams is a debasement of your life.
The Meaning Of Life
Most people throughout history found meaning in the pursuit of something greater than themselves. Whether it be family, community or religion, the participation and expansion of what they believed in was what gave their lives meaning. The pursuit of a legacy that lasts — whether by building cities, raising progeny or teaching ideas — was what they pursued and found meaning in.
Family, community and religion were all integral parts of civilization. They were a firm foundation to build society on. Building required all sorts of different skills and talents. The hard work involved meant something because the creations would last.
For example, cathedrals throughout Europe were built with volunteer labor over many decades, sometimes centuries. Many of the people working on them wouldn’t see the fruits of their labor in their lifetimes, but it meant something because these structures and what they represented would last. Of course, it wasn’t just cathedrals, but family legacies and community organizations that lasted past the lives of those who contributed to them were just as forward looking and just as meaningful.
Contrast that to what’s happening today. Many people work in companies that go bust in a few years. Even the companies that are relatively old are essentially zombie companies, surviving off of Cantillon effects and government subsidization. The buildings we live in are not meant to last. Research that’s done is for rent-seeking purposes and not the pursuit of truth. Fiat money has raised the time preference of every traditional source of meaning and has debased those sources along with it.
The last vestiges of meaning like family, community and religion while continuing to exist, have also been debased, especially over the past 50 years. Families have grown smaller, communities more distant and religion invaded by fiat culture.
I’ve already written much about fiat education, fiat companies, fiat science, fiat art and fiat knowledge. These are substitutes for real meaning and real communities. The fiat substitutes are like parasites that have drained meaning from all possible sources of a genuinely meaningful life. The drain is ostensibly to perpetuate the fiat money game.
Fiat Education Versus Family
Fiat education has become a substitute for family. Traditionally, families were where values and skills spread. Each generation would learn and pass on the values and skills to the next generation. Legacies of families would continue not just in wealth but in names.
Names used to mean something. Giving a child a good name meant that the child was expected to have certain manners and values. Each family had an identity that was consistent and reliable. Instead, this role of propagating certain values and skills has now been subsumed by fiat education. As a result, where you graduated from means far more in the marketplace than your name because that’s where values and skills are obtained.
The substitution is supposedly more fair, but is in reality a method to instill more compliance to the state. The values have largely become uniform and “progress” always seems to be going in a direction antithetical to the competition, that is family. Identities are increasingly based on large ideological camps with little variety in between.
Further, values change every generation because the whims of the elites change. Whoever is in charge gets to set the agenda and that agenda has little consistency. The state has taken over the passing down of values and skills so it’s no wonder so many people will do what the state says and believe what the state says to believe. Compliance is the main value taught by fiat education.
Compliance is a very poor substitute for the real virtue of love. Families encourage duty, loyalty and sacrifice because there is a natural love among kin. The state tries to get the same from compliance, which is a deeply debased form of love.
Fiat Companies Versus Community
Fiat companies have become a substitute for real community. A real community is where people know each other and trade with one another their goods and services. Each individual builds without needing permission from authorities. Community values are enforced through social ostracization. Rent-seeking, for example, is shunned. Merit is how goods and services are judged and it produces better stuff through competition. The result is a unique culture, values and bonds that provide meaning.
By contrast, companies have an artificially large authority structure meant to serve the fiat money game. They have a set of values that are given top-down. The larger they are the more they are infected with rent-seeking. Politics is the main means by which benefits like promotions and raises are handed out. As a result, the people in them pursue power which consequently turns companies into sociopathic nightmares.
The reason why companies are such poor communities is that the incentives are so terrible. Fiat companies exist to make a profit and not build up anything significant or long lasting. Because of the presence of fiat money, financialization is inevitable for any company that lasts for any significant amount of time. A financialized company can make money in the short-term without providing much value and this is generally preferred to the hard work of producing low time-preference, civilization-building goods and services. Given the Cantillon effects available to large corporations, the souls of these companies are quickly consumed by fiat money rendering them zombie-like.
You would think these places would have lots of easy cushy jobs because of the significant amount of rent-seeking available. Yet, because of the politics and power dynamics at play, these jobs tend to be just as hard or even harder than a non-rent-seeking job. Because of the political demands of leadership positions, they are just as taxing, or more so than non-rent-seeking positions. Making partner at a law firm can require working 80 hours a week. Same with founding a VC-backed startup or getting to a C-level position. Achievement in this context comes at the expense of everything else. You may be powerful and make lots of money doing very little real work, but you also do lots of busy work and barely see your family. You are winning at a game that really doesn’t matter in the long run. Few people will remember that you were made a partner 100 years from now.
No wonder so many people in these places are depressed. Many are winning Cantillon status games, but they are doing so without achieving anything real or creating any sort of legacy. They are ultimately just stealing from everyone else through financial games enabled by the state. These careers have little meaning and deep down, most people know it.
Communities, by contrast, have hope in a common future and build what will outlast them. Companies, in other words, are deeply unsatisfying as far as meaning is concerned.
Fiat Politics Versus Religion
Politics has become a substitute for real religion. It gives some pretense of larger meaning, but it’s shallow and limited mostly to rhetoric. The prize of the money printer has heightened the stakes more than ever. Being beset by rent-seekers, there’s now an academic priesthood whose work is more bureaucratic than philosophical.
This has had an unfortunate effect on science. The pursuit of knowledge was, for many pioneers of science, a way to learn more about God. Science was an extension of their religious devotion and meant more than the status contest that it is today. They found meaning in the pursuit of science precisely because it aligned with their values.
By placing politics in the place of true religion, fiat science has become more and more unanchored from reality. The metaphysical and philosophical basis for science has been replaced with a political agenda and thus, truth and reality have been tossed aside for rent-seeking. Fiat science embodies nihilism and power of politics rather than truth and reality of philosophy. It’s no wonder so little progress has been made despite the enormous amount of centrally planned money that has gone into it.
Fiat art similarly reflects a lack of a metaphysical anchor. The art itself is incredibly convoluted and esoteric reflecting once again the nihilism and power games of politics. Instead of reflecting truth and beauty, it’s reflecting the meaninglessness of the politics that produced it. Artists of the Renaissance, for example, were deeply religious and saw their art as an extension of their religious devotion. It was considered uncouth to paint anything that didn’t honor God. But because of its essentially political anchoring, fiat art has become a giant status game. What was transcendent beauty has been debased to rent-seeking.
Fiat Meaning
Fiat money, in other words, sucks the life out of everything that would normally be meaningful. This is in no small part due to the immediacy of monetary debasement. We’ve been engaged in high time-preference behavior and everything has gotten infected by its inverted value system of money over meaning.
Fiat companies, fiat education and fiat politics all give the pretense of meaning through substitution. Instead of virtues like love, hope and faith, we get fiat substitutes like compliance, an authoritarian vision and nihilistic status games. We comply with these games because we don’t want our stuff to get debased even further.
Our choices are profoundly limited by what’s acceptable to the people in power. Our world of possibilities has shrunk into the sanitized versions which lack any soul. What was once meaningful has been debased to something that furthers the state’s agenda. Our jobs, our accomplishments, our communities and everything else that might provide meaning to our lives have been made into weapons of the state to further its goals, and not our own.
The typical things that give our lives meaning, like marriage, family, children and even identity have been changed by government decree. Meaning has been sucked out of them and we are being trained through propaganda to pursue only state-approved things. The authorities want us to be compliant to them and having any other loyalty would make us less compliant.
Compliant people are much easier to manage. These were the people quarantining for months at a time, supporting wars and even gender-transitioning young children. Compliance to the state and furthering its goals are the only meaning we are allowed to have.
Utopian Vision
We don’t build anything that lasts anymore, so we have to make do with political goals that the state is building toward. This is a common theme in socialist countries like Nazi Germany which wanted a racially pure world free from Jewish and Slavic people. Stalinist Russia pursued a worker’s paradise promised by Marx.
All the energy that would go into productive meaningful activity is instead directed toward some vision of the state given by the elites. These are narratives, which like the second law of thermodynamics get more chaotic over time. The current vision in the U.S. is toward a peaceful world that is policed by the U.S. where everyone in the U.S. can be taken care of without working very much so they can pursue a form of hedonism. In short, the vision is to become the first rent-seeking nation, without all the frantic busywork of politics.
Yet as we have seen, this vision is anything but a reality. The U.S. is engaged in more wars than ever. These wars keep costing more money, more equipment and more people. The U.S. is also spending more and more on social programs and bailouts. Even the dollar’s status as the global reserve currency is under threat. Yet this vision is pursued with religious fervor because everything else has so little meaning. Debasement of all that would give meaning has left only the state’s vision. We have been made to settle for fiat meaning.
Bitcoin And Prudence
The subversion of meaning has had truly depressing consequences. Identity used to come from family, community and religion, but it’s now about fiat education, fiat companies and fiat politics. The meaning people do find is in extremely shallow and high time-preference things like social media and political rallies. Reading Twitter about the outrage of the day is a good indicator of how little things really matter.
Meaning has to be, by nature, low time-preference. We’ve lost meaning because we’re being bombarded with high time-preference concerns. How do I measure up to these models on Instagram? What will these people think if I don’t keep advancing in my career? Notice how narcissistic such questions are. This is what high time-preference people look, sound and feel like.
What Bitcoin brings back is a perspective on the long-term. When living under a fiat standard, the future is very murky and the immediacy of the present, particularly with the debasement of savings makes looking at the long-term very difficult. By enabling savings, our minds are freed up to think about the long-term. We can think about the legacies we are going to leave and the ways we want to contribute to civilization. We have the mental space to dream about these things because savings allows us to plan.
The people that have been doing this the most are the much-derided Bitcoin Maximalists. They pursue more meaningful things because they have a long-term perspective. Having unhooked from the fiat system, they start to see clearly that the truly meaningful things need to be pursued at the individual level and not through a political program.
Traditional ways of finding meaning are being pursued. I know many who have started families, engaged in community and found religion. This transformation is surprising to people, especially those outside of Bitcoin, but it makes sense when looking through the perspective of virtue. Savings gives us that room to examine critically what we’ve been pursuing and the lies of fiat money become quickly apparent under even a little bit of scrutiny.
Bitcoin lets us pursue our dreams again.
Ten Meaningless Things You Are Way Too Concerned With
- The score of last night’s game.
- The approval of some internet random.
- The sequel to a movie that violates some previously established canon.
- The opinions of some celebrity.
- A carefully crafted public statement of any kind.
- Any rationale for bad behavior by public officials.
- Video game release dates.
- Number of likes on any social platform.
- Proving someone wrong on the internet.
- What a Kardashian did last week.
This is a guest post by Jimmy Song. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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.
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.
I don’t.
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.
Get real.
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.
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.
Source: Title deed of unregistered real estate propriety
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.
Conclusion
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.
