This article originally appeared in Bitcoin Magazine’s “Censorship Resistant Issue.” To get a copy, visit our store.
The internet loves to trade. Doesn’t matter what. Doesn’t matter why. Doesn’t matter how. Over the last decade, exchange has become a medium through which community is created online. Depop, WallStreetBets, Buying/Selling groups, NFT discords; these are novel online spaces where the line between market and social group is as thin as the member count is large. Through the growth of these exchanges, economies emerge, and with these new economies come new systems of value. Sometimes there is little antagonism between these systems and the larger economies within which they exist. The value of shoes for example, while subject to considerations of hype, narrative and rarity, is still interpreted in relation to money. Sometimes however, the animosity is palpable. Sometimes it’s the point. And sometimes it gets big enough that the world, whether it wants to or not, is forced to contend with it.
If Bitcoin is one of those latter economies, Pepe, the cartoon frog meme, is as well. Over the course of the past fifteen years, both have experienced massive growth and market-threatening bubbles, idealistic evangelists and profit-maximizing speculators, malicious actors and dedicated communities. What connects them, aside from the assorted projects in which the Pepe economy sometimes finds a home, is the resonance their stories share and the means by which they mean something. Pepe and Bitcoin both represent systems of value forged in stark opposition to the one surrounding them, and both protect that value through a mutually reinforcing consensus of its worth. But while the economic origins of Bitcoin need little explanation, the development of Pepe from meme to commodity and back again requires a bit more to picture. To understand how Pepe became valuable, it’s useful to understand why many thought he should not have been.
In 2014, Pepe was bigger than ever. Pictures of the frog were inescapable across almost every corner of the internet. His Tumblr tag was blowing up, Facebook meme pages were posting him left and right and KnowYourMeme had been covering him for almost half a decade. Pepe, this cartoon frog ripped from a comic book from a decade ago, had taken over the web. As with most memes, Pepe was for many people a way to have some lighthearted fun sharing and laughing at the plethora of his variations with their friends. Others, however, were not happy.
Before going mainstream, Pepe had gotten his memetic start on the cultural fringes of the internet. It started in early 2008, when a scan of Matt Furie’s comic book “Boys Club” from three years prior was uploaded to 4chan’s popular /b/ board and the forums of “Something Awful.” The page features Pepe, one of the four main characters in “Boys Club,” pulling his pants all the way down to pee. When his friend Landwolf asks him why he does that, Pepe responds with quirky and self-assured charm; “feels good man.”
Pepe soon became a fixture in these communities, his variations and visage becoming commonplace. Found a dollar on the street? Feels good man. Didn’t get the job? Feels bad man. He was the perfect reaction image; a genre of meme that lives and dies on its ability to accurately reflect the feelings of the user posting it. Not only was he simple and authentic, but the two constituent parts of Pepe as a meme — his face and his catchphrase — could always individually stand in for the whole. No matter where you were on the internet, no matter what medium you were restricted to posting in, you would be able to give other people insight into how you felt by means of a reference to the funny internet frog. His early mention on BitcoinTalk is a great example of this.
But versatility is not the same as ubiquity, and Pepe’s development as a reaction image was therefore subject to what his original user base was reacting to. Individually, this is impossible to do, but if we’re thinking about the general nature of such reactions on a scale large enough to create meaning, we’re asking about the conditions of a class.
The problem in 2014 was that Pepe was being overused in platforms dominated by normies, whereas he originated in communities predominantly populated by NEETs. NEET is a socioeconomic acronym-turned-identifier which stands for “Not in Education, Employment, or Training.” NEETs are typically 18-35, somewhat adrift in life and — not generally, but certainly within the communities that use the term — mainly male. Alternatively stated, they’re the demographic of the characters in “Boys Club.” Not everybody on 4chan is a NEET, but many are, and even those that are not will pretend to be. “It’s very easy to LARP as this sort of collective,” Brandon Wink, Editor-In-Chief of KnowYourMeme explained. “Yeah, we all live in the basement. Yeah, we’re all this exact same person […] It just makes communication and having a fun time easier.”
NEETs, and thus Pepe’s original user base, are a class distinctly outside of the traditional economy. They neither participate in the production of its goods and services (employment), nor are they on a path to do so (education and training). They still must live in it of course, but they do so begrudgingly. The communities they congregated on, 4chan and Something Awful, can be considered NEETs in their own right. They barely made any money, work on the sites beyond just keeping them running was rare and the teams behind them were relatively insular. Pepe was a symbol of these types of users on these types of communities as the dominant internal reflection of the way they interacted with the world; to see him creep into the mainstream was to see that significance perverted.
Pepe’s normification is his commodification. Normie platforms, aside from being more popular, are also the ones that have a profit motive. Facebook, Twitter, Tumblr, etc. These are algorithm-driven feeds where engagement is synonymous with value. The popularity of a post is therefore not an end in itself; the collective relatability or enjoyment is merely a means to more impressions and thus more money for the hosting company. Celebrities with huge industries behind them were posting him, mainstream meme pages driven by huge organic growth and sponsored posts plastered him everywhere. The twist of the knife was that Pepe was now a reaction image, employed to describe social and cultural conditions that were not positioned as the outsiders. “This was Pepe misinterpreted,” one timeline of Pepe uploaded to imgur lamented, “this was Pepe with friends.” Pepe, a NEET, had been conscripted into being an active participant in the very milieu that was so hostile to his origins.
Earlier we spoke about the two resonances between Pepe and Bitcoin; the motivation behind their economies and the consensus that keeps them stable. The two reactions to Pepe’s normification, and their ensuing fallout, also happen to illustrate these two connections, albeit at different points in their development.
In the wake of the 2008 financial crisis, Bitcoin emerged as an alternative to centralized banking. The stewards of capital, it was argued, were in no position to hold such power, and as such a new decentralized economy had to be formed. This is no simple task, as getting everyone to buy into and participate in this new economic regime required them to take a leap of faith; they needed to see Bitcoin, a network protocol of distributed math on the internet, as inherently valuable.
Pepe needed no such leap. In October of 2014, 4chan users began to post Pepes with watermarks saying “Rare Pepe – Do Not Steal” or similar messages as a tongue-in-cheek way of combating the spread of their memes to other platforms. As this went on, a LARP-y pseudoeconomy developed. Different users would create Rare Pepes and offer them up for sale or exchange to other users. Pepe for Pepe, Pepe for Good Boy Points, Pepe for tendies, etc. The currency was fake, but the symbolic value was real. The normies could have the normie Pepes, fine, but everyone knew the Pepes that were really worth something were the ones that were less common and accessible. Having a collection of Rare Pepes meant you had been around the places where they appeared, and trading them meant that you were part of the group that knew what the important ones really were. Just like Bitcoin, Wink told me, the practice of exchange was intimately tied up with the definition of its surrounding community. And, like Bitcoin, Rare Pepes quickly found that their abstract communal value was finding footholds in the real world.
This was retaliation by recommodification and a fixing of the record of Pepe’s worth on their own terms. This economy, which for all intents and purposes started as a bit, found more and more people committed to it; eventually indistinguishable from a real economy. As one Reddit user put it; first its funny to trade Rare Pepes for internet points, then it’s funny to trade Rare Pepes for a couple dollars, then it’s funny that a folder of Rare Pepes is driving bids upwards of $90,000 on an eBay auction, then it’s funny that people are trading thousands of them on the blockchain. “You normies took our whole meme and only draw value from an incremental engagement boost? Hold my jpeg.”
There are, however, two ways to change the way a commodity is valued; usurp the current method of extracting value with a greater one or create such conditions as to devalue it altogether. While 4chan’s /r9k/ board was busy swapping Rare Pepes for tendies and memeing themselves into some paychecks, the reactionary-dominant /pol/ board had another idea; make Pepe untouchable.
If you want normies to stop using Pepe, simply make him as obscene a symbol as possible until they stop using him. While /pol/ started with an attempt to associate him with excessively cringe toilet humor (e.g., quite literally memes along the lines of “Pepe PeePee PooPoo”) things quickly took a turn for the fascistic. Images of Pepe with offensive slurs, racist caricatures, and swastikas circulated around the board and through other hotbeds of the newly emerging online political faction soon to be dubbed the Alt-Right. As intentional poison-pills, these images were spread onto larger platforms and slowly inflected Pepe’s broader image with the knowledge that there was a group that was beginning to use him as a dog whistle. This was a distinctly more directed effort in comparison to what some shitposters referred to as the “circlejerk” nature of Rare Pepes. According to Arthur Jones, director of the Pepe documentary “Feels Good Man,” the intention was specifically to invoke a feeling of “satanic panic” — to make Pepe so abhorrent that any sight of him was always a sign of something much more sinister.
This effort was effective, and culminated with the Anti-Defamation League declaring Pepe a hate symbol in late September 2016. For the trolls, this was a huge win in what they narrativized at the time as “The Great Meme War.” For others, it was a loss. “It kind of sucked,” said Shawn Leary, one of the “Rare Pepe Scientists” behind the Bitcoin-based Pepe trading platform Rare Pepe Wallet, “we put all this work into this thing and then it became this political football […] I didn’t want to tweet about it. Who wants to be called a racist even though it was all Safe For Work?” Adding yet another layer of irony to the story of Pepe, it seemed like his existence for some of his most dedicated followers was being put at risk by the campaign of a cohort theoretically on the same side of their battle. The censorship was coming from inside the house.
There was a third group though, and it was the biggest one. Their reaction was characterized not by enthusiasm nor dismay, but a lack of one altogether. Recounting his experience talking to teenagers at a March For Our Lives rally in Washington, D.C., Jones noted his surprise at the fact that none of them had even registered Pepe as a hate symbol. “They liked him because he was a sad frog,” Jones explained, “and they viewed him as a slightly washed meme at that point.”
For all its sound and fury, there are few forces on the internet more powerful than indifference. The attitude of “let the normies have their Pepes” goes both ways. God forbid the edgelords are being edgy with the frog. At the end of the day, Pepe is a meme, memes are open-source and that constitutes a protective measure. There’s a palpable irony to any attempt to gatekeep Pepe. Normies were using Pepe, Pepe underwent a campaign to be turned into a hate symbol, that campaign was effective — and then what? Then nothing. They were successful in the moment but there was still the vast majority of your regular internet content consumers that (a) never really thought of him as a hate symbol, (b) never had a vested interest in protecting him and (c) still like him generically as a meme. Teenagers on the internet are not overwhelmingly on chan-boards, and they probably don’t know what the ADL is. Slowly, another reclamation happened, this time with no battle declared; over time, an understanding grew that all of the attempts to derail him had almost nothing to do with the meme itself.
This is the second and more abstract link between Pepe and Bitcoin; this safety in consensus. Nodes in the blockchain submit their work to other nodes to have it checked and verified, and are granted the ability to add transactions to it. It is possible to try to submit a different result, to try to get access to that ability to become the next source of truth through an answer other than the correct one, but the result will inevitably fail; if nobody agrees with your submission, the transactions and meanings that come along with it are irrelevant.
In flashes, small but dedicated groups have attempted to take control over the latest meaning of Pepe. Realistically though, Pepe has a level of ubiquity on the internet that protects him. The consensus is that he’s the funny internet frog, the guy in monkaS, Feels Good Man etc., and the internet as a whole is much greater in numbers and much healthier in longevity than any of its flashpoint subcultures. He can — and has been — pulled in many directions, but the hash power of the internet as a whole is much larger than any one node trying to take control. Pepe is a symbol of value, a story of community and a reflection of the multiple layers and timelines of the internet. Most of all, he’s here to stay. He’s the internet frog, whatever that means to you. Feels good man.
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.