This is an opinion editorial by Stephan Livera, host of the “Stephan Livera Podcast” and managing director of Swan Bitcoin International.
It’s time to clear a few things up. While there has been a lot of digital ink spilled over the years debating the concept of Bitcoin Maximalism, we seem to be going back to some of the same arguments over and over — notably in Nic Carter’s recent Medium post and Pete Rizzo’s Forbes post.
Here are a few thoughts I want to add: Critics of Bitcoin Maximalism seem to believe that maximalists are just toxic, hoi polloi, and not technically savvy on the realities and realpolitik of the “crypto” world. Bitcoin Maximalists on the other hand tend to believe their worldview is the ethical, rational and pragmatic stance to take in a world corrupted by fiat currency. So, what does it really mean to be a Maximalist?
What Is Bitcoin Maximalism?
I view Bitcoin Maximalism as simply being the view that bitcoin will someday be global money and/or that we’ll live on a bitcoin standard. This is otherwise known as “Monetary Maximalism,” but where is the monetary Maximalist idea coming from? Generally, it is based on the idea that money is the most marketable good, and that bitcoin has superior monetary qualities. There is a tendency toward the most marketable good, as Ludwig von Mises spelled out in “Theory Of Money And Credit”:
“The greater the marketability of the goods first acquired in indirect exchange, the greater would be the prospect of being able to reach the ultimate objective without further manoeuvering. Thus there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.”
What Do Most Bitcoin Maximalists Believe?
In practice, most of the Maximalists I know are simply disinterested in non-monetary uses and are more interested in distinguishing Bitcoin from all of the “crypto” garbage out there. And at times like these, with so many crypto lenders stopping withdrawals (e.g., Celsius, Vauld, Voyager), filing for Chapter 11 bankruptcy (e.g., Voyager) or taking bailout deals (e.g., BlockFi, Voyager), there’s a strong case to say the Maximalists were right.
At the time when newcomers were running like yield-chasing lambs to the slaughter on these platforms, it was Bitcoin Maximalists who were warning about the rule, “not your keys, not your coins,” and warning against high-risk yield platforms.
What Do Most Maximalists Actually Want?
Really, what most Maximalists want is clear separation between Bitcoin and all the other stuff. As I see them, they are generally focused on promotion and support of Bitcoin. They may act to warn against false promises or against gambling on “cryptos,” or against inaccurate attacks on Bitcoin.
They generally want the altcoiners to stop attacking Bitcoin as part of their marketing. Bitcoin has no centralized foundation with a marketing budget, but many altcoins do. Many altcoiners spend time trashing Bitcoin in public media as a means of marketing their altcoin. Altcoiners attacking Bitcoin is often a necessity because there’d be no need to even think about their altcoin unless you believed some FUD about Bitcoin. Historically, this has taken the form of, “Bitcoin isn’t fast enough, therefore use my faster altcoin.”
In some cases, people associated with altcoins will explicitly sponsor attacks on Bitcoin. The executive chairman of Ripple, Chris Larsen, for instance, openly sponsored a $5 million attack on Bitcoin’s proof-of-work security (with a donation to Greenpeace USA).
If altcoiners did not attack Bitcoin, and did not attempt to “ride the coattails” of Bitcoin by conflating things together in a “crypto” industry, there’d be far less conflict.
Monetary Maximalism, Not Platform Maximalism
But Bitcoin Maximalism, as thought of in the context of Monetary Maximalism, can and should be contrasted with Platform Maximalism. The idea here is that everything should be built “on top of” Bitcoin and any alternatives should be discouraged completely.
But I can rightly understand the critique of “Platform Maximalism” because not everything can be or should be built “on top of” Bitcoin. There will be some things that are simply not technically feasible to put on top of Bitcoin, or they would require making unacceptable trade-offs to do so, harming Bitcoin’s decentralization, strict supply cap, verifiability, accessibility or scalability.
But critics of Bitcoiners will sometimes conflate and attack the Platform Maximalist view as though that is what all Bitcoin Maximalists believe, when Platform Maximalism is really a more rare view in practice.
What does “Being Built On Top Of Bitcoin” Mean, Anyway?
Even this question becomes difficult to cleanly define. Most would say the Lightning Network, using bitcoin UTXOs to open/close channels, clearly is being built on top of Bitcoin. But when it comes to things like sidechains, federated sidechains, altcoin cross-chain swaps, etc., perhaps it’s less clear.
For example, does a cross-chain atomic swap from Bitcoin to an altcoin count as being “built on Bitcoin”? Debatable. It certainly wouldn’t qualify as Bitcoin-only.
That said, should stablecoins or IOU tokens be classified as altcoins, or just something different entirely? For example, the use of L-BTC on Liquid to represent pegged-in bitcoin IOUs seems an upfront and unobjectionable way to represent what’s going on. There is at least no altcoin that can be pumped and dumped by insiders onto unsuspecting retail investors. The amount of bitcoin pegged into the Liquid federation can be verified externally, and L-BTC can be viewed more like a money substitute, in the “money certificate” sub-category as outlined below:
And What Of Stablecoins?
As for stablecoins, aren’t they just crypto-fiat? Firstly, the name is a bit misleading. They’re not really so stable, more just steadily declining, just like fiat currency is over time. Secondly, most people accept that for now, fiat is still dominant and that stablecoins may form part of the process of slowly shifting the world to a bitcoin standard. I could see pathways where some new users (often not in the Western world) start using stablecoins and then slowly transition over to using bitcoin once they are more comfortable.
No matter how good stablecoins are for short-term payments, they are still not suitable for long-term savings. Stablecoins track fiat currency, which is continually decreasing in purchasing power. A key part of the case for Bitcoin maximalism is that billions of people around the world need something they can save with. This savings demand is also known as reservation demand, and it is a key component in the process of an asset becoming money.
On the other hand, it’s also possible to see government regulatory action or legislative action come that regulates stablecoins in such a way that they lose their relative ease of use. For example, this could happen if stablecoins were to be regulated as money market funds, or with additional banking regulations that required KYC on every step of stablecoin use, or if private stablecoins were regulated heavily in favor of promoting government-issued central bank digital currencies (CBDCs). At that point, it would become even more clear that Bitcoin is uniquely censorship- and inflation-resistant.
Is Bitcoin Maximalism Boring?
Is Bitcoin Maximalism boring or is it just consistent? Maybe savings shouldn’t be so “exciting,” anyway. What the world needs is definancialization, and part of that is the long-term process of sucking out the “monetary premium” that is currently held up in physical properties, stocks or bonds. Over time, we anticipate more people to choose Bitcoin, or “defect to” Bitcoin, if you like. Instead of stacking bonds, index ETFs or properties, people will stack sats.
While savings might be “boring,” if we’re talking about exciting things, why not consider the impact that sound money would have on the world? There are all manner of sociological impacts that will come from bringing about non-state money. This is because fiat money changes culture. A lot of the altcoin projects seem more like chasing the next shiny thing, and they like to move fast and break things — but Bitcoin as a movement is about civilizational infrastructure.
“But There Are Lots Of Other Chains With Demonstrated Value”
So, the claim that altcoins have demonstrated throughput or fees paid represents the protest of altcoiners that there are meaningful uses of altcoin chains and financial services being provided in a decentralized way. They argue that this will be a multi-chain world and some even go so far as to say that Bitcoin will be flippened because this activity is not taking place on Bitcoin.
But really, how much of this was just because of the shitcoin casino factor? The leverage casinos can definitely pull a crowd, but is that the crowd that matters? Will these be the people who HODL through the big drawdowns, and stack consistently? Will these be the people who build companies, code and review software or build hardware that helps advance the Bitcoin monetary revolution?
Altcoin promoters and apologists will point to the volume of transactions, fees paid, or total value locked (TVL), and the use of cross-chain “bridges” as to why it will supposedly be a multi-coin future. Some will argue that altcoins are building up an “economic engine.” But from the Bitcoin monetary maximalist POV, there’s little reason to continue holding utility coins anyway.
See this critique of utility coins by Adam Back, CEO of Blockstream:
It may well be that people use different rails to transfer value, but the Bitcoin revolution is very much about growing the base of HODLers/stackers/savers. Just like how you can use Zelle or PayPal or Cash App to send USD, the thing that helps the USD is that there are lots of people who want to hold it, and people who price their deals and exchanges in USD.
So even if there is a lot of transactional flow on altcoin chains, or even if lots of stablecoins are flowing via altcoin chains, what matters is that bitcoin’s scarcity and overall qualities are valued by people. Even if bitcoin is “held on” Binance Smart Chain in a “smart contract,” how is this meaningfully different from say, bitcoin held by a custodian such as Coinbase, BitGo or the like? At the end of the day, all of Bitcoin’s coins are existing on Bitcoin’s ledger, there are just different custodians of it. The number of people HODLing bitcoin and wanting to stack it is what matters most.
Running with this idea from Sergej Kotliar of Bitrefill, it’s important for us to understand the difference between neutral “Bitcoin the tool” users, and those who are ideologically aligned with the Bitcoin movement (broadly speaking: cypherpunks and libertarians). Just as there are millions of BitTorrent users who would never go to a BitTorrent conference or consider themselves part of the “BitTorrent movement,” there are Bitcoin users who are similar.
They use Bitcoin tools just by searching online for “best bitcoin wallet” or they use the already existing wallet by their providers e.g., blockchain.info wallet, as that has been around for ages. They even use shitcoin wallets like Exodus. Now, as maximalists and members of “bitcoin the movement,” we can certainly have our views about shitcoin wallets and companies that aren’t popular among Maximalists in the space (Blockchain.info or Coinbase as examples). But we do have to accept the reality that currently, shitcoin casinos have a lot more users. They may currently be able to drive more new users into shitcoin wallets than we can funnel into bitcoin-only non-custodial wallets. At least, for now.
How Bitcoin The Movement Still Wins
The main things that altcoins can’t match are the monetary properties and decentralization of Bitcoin. But in addition, they can’t match the size and quality of the Bitcoin movement. There are Bitcoin meetup groups around the world, developers working to advance the protocol and applications, peer-to-peer bitcoin trading in many cities and miners distributed around the world.
Many people work to advance Bitcoin’s adoption because they believe it is the right thing to do. As a community of advocates, educators, builders — we do have the ability to drive the direction in terms of what gets built out, and the products and services that get taught to newcomers, especially if they are our family and friends. Altcoin communities are nowhere near as stable because the alts are so fickle, one day they are pumping 10 times, and the next it’s all gone bust or imploded. While the vast majority of altcoins that pump are basically one-hit wonders, as explained by Sam Callahan and Cory Klippsten of Swan Bitcoin, Bitcoin remains and carries on growing over time.
While there are lots of users who aren’t strongly engaged with the movement, they do end up benefiting from the things done by “Bitcoin the movement.” I believe driving adoption of non-custodial scaling technology and privacy technology will be done by ideological Bitcoiners who want to ensure that Bitcoin remains freedom technology. And the benefits will flow down later to the “neutral” users who don’t really care that much either way.
So in summary, Bitcoin Maximalism is the view that we’ll live on a bitcoin standard. Maximalists want to clearly distinguish Bitcoin from “crypto.” They are focused on development, building, education and community growth. There is pressure not to shitcoin scam or shitcoin grift, and this is generally done for the sake of retail consumer protection. Other projects may exist, and they may even attempt to interoperate or connect with Bitcoin in some way, but ultimately, this is about the Bitcoin monetary revolution.
Thanks to my friends Michael Goldstein (aka Bitstein) and Giacomo Zucco for their feedback on this article.
This is a guest post by Stephan Livera. 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.