Understanding the First Inscription $RGBS on the Bitcoin Smart Contract Layer RGB Protocol

RGB Protocol Background

Given that RGBS is the first inscription asset issued on BitRGB, a platform for asset issuance based on RGB, it is necessary to mention the RGB protocol. The official definition of the RGB protocol is the smart contract layer of Bitcoin. As the most promising and highly sought-after Bitcoin smart contract solution in the Bitcoin ecosystem, RGB was launched by the LNP/BP technical team with a geek spirit, and its founder is Maxim Orlovsky. RGB has received support from institutions such as Bitfinex and Fulgur Ventures.

BitRGB is based on the RGB architecture, which fully inherits the high performance and scalability of the RGB protocol. $RGBS, as the first inscription asset on RGB, will carry the huge traffic endowed by it. $RGBS has the opportunity to become the mainstream Bitcoin ecological asset following BRC20 inscription assets, leading the direction of new Bitcoin asset narrative.

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According to official news from BitRGB, $RGBS early casting is open to whitelist users, and community members who join the official DC and complete the Zealy task will have the opportunity to obtain whitelist qualifications.

BitRGB Solution

BitRGB emerged in the above context, positioning itself as an asset management platform based on the open-source RGB protocol. Its aim is to address the scalability and limited application scenarios faced by BRC20. By introducing assets in the more scalable RGB20 format, BitRGB expands the application scenarios of assets and becomes the next growth driver for the development of the Bitcoin ecosystem.

1) Core Features

BitRGB inherits the powerful features of the RGB open source protocol. RGB is an open source protocol focused on Bitcoin smart contracts, proposing core concepts such as one-time sealing, client verification, privacy-protected blinded UTXOs & Bulletproof. Based on these concepts, BitRGB aims to become the first Bitcoin asset management platform in the Bitcoin ecosystem that is both scalable, programmable, and privacy-protected.

One-time sealing:

BitRGB inherits the concept of one-time sealing from the RGB protocol, ensuring that an asset or data is only used or locked once. Since a Bitcoin UTXO can only be spent once, a Bitcoin UTXO can be seen as a one-time seal. The specific workflow is as follows: 1) The asset issuer creates a new asset in the client, generates a one-time seal and a transaction commitment, at this time the asset belongs to a Bitcoin UTXO, that is, this UTXO owns the ownership of the new asset; 2) The issuer anchors the new asset to the Bitcoin network by embedding the transaction commitment into the Bitcoin UTXO; 3) The asset receiver verifies the validity of the asset through the verification of the transaction commitment and one-time sealing; 4) After the transaction is verified as valid, the asset is transferred, the old one-time seal is destroyed, a new one-time seal is generated, and the transaction commitment and transaction data are anchored in the Bitcoin network.

Client verification:

Unlike Bitcoin, which requires every node to verify all transactions through global consensus, global consensus means that nodes need to continuously download and verify all transaction information in blocks and memory pools, leading to privacy leaks and high transaction costs. BitRGB uses client-side verification to ensure the validity of transactions, requiring only bilateral consensus between the asset sender and receiver, meaning that transaction content data is only transmitted between the sender and receiver of the transaction, while the content is stored off-chain, and the data commitment is on-chain. Users verify the blockchain data when receiving it to ensure its validity.

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Privacy Protection: Blinding UTXOs & Bulletproof

In order to allow the asset recipient to obtain additional privacy attributes from the sender, BitRGB uses blinded UTXOs as the only output points. This means that the asset recipient can achieve privacy protection by providing blinded UTXOs to the sender. The format of blinded UTXOs is concatenated by UTXO and a random blinding secret hash.

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In addition, in order to hide the specific amount of each transaction conversion and prevent it from appearing in the transaction history of assets, RGB uses the zero-knowledge mechanism Bulletproof developed by Blockstream. With Bulletproof, users can obtain privacy from the future asset owner when verifying transactions. Although they will be able to see all UTXOs that previously owned the assets, they will not be able to accurately view how much was transferred in each state transition, thus achieving privacy protection of asset status.

2) Breaking Through the Impossible Trinity of Bitcoin Scaling

The surge of Ordinals has led to the birth of numerous asset issuance protocols within the Bitcoin ecosystem. While Bitcoin is not short of such protocols, what it lacks is the implementation of smart contracts and scalability. Bitcoin scaling faces an impossible trinity, meaning it’s challenging to achieve decentralization, scalability, and Turing completeness simultaneously.

BRC20, as a leading protocol in the Ordinals ecosystem, has brought significant traffic to the Bitcoin ecosystem due to its popularity. However, it lacks Turing completeness and cannot facilitate smart contract applications. Additionally, BRC20 heavily relies on centralized indexes for data interpretation, posing substantial centralization risks.

Bitcoin sidechains or second-layer solutions like Stacks, although capable of supporting smart contracts and offering Ethereum Virtual Machine (EVM) compatibility for easy migration of applications from Ethereum, generally face issues with centralization.

bitRGB, inheriting the characteristics of the RGB protocol, effectively breaks through the constraints of the Bitcoin scaling impossible trinity. It simultaneously satisfies Turing completeness, decentralization, and scalability, offering a promising solution in the evolving landscape of Bitcoin’s technological infrastructure.

3) Diversified Smart Contract Scenarios

BitRGB’s initial positioning is a Bitcoin asset management platform, with core functions including the issuance and trading of Bitcoin assets, among other scenarios. However, it is not limited to this, and BitRGB will continuously introduce smart contract scenarios in iterative upgrades to meet the diverse needs of users.

Currently, the Bitcoin ecosystem asset issuance protocol is rampant, with a variety of asset types, but there is a serious lack of application scenarios based on assets. The development of the entire ecosystem relies on the user FOMO sentiment brought by wealth creation benefits, and is not sustainable in the long term. In the future era of multi-asset Bitcoin, the second wave of explosive growth in the Bitcoin ecosystem will require diversified application scenarios. The realization of diversified application scenarios depends on the support of smart contracts. Ordinals do not have the property of Turing completeness, so they cannot break through this bottleneck limitation.

BitGB has implemented the native support for smart contract scenarios, providing potential empowerment scenarios for its assets; BitGB is also a very promising stablecoin issuance platform. With stablecoins as the foundation for ecological development, BitGB will promote the development of high-frequency payments, Defi, lending, NFT, and other fields, expanding the diversified application scenarios of the Bitcoin ecosystem.

4) Challenges of BitRGB

BitRGB offers a promising pathway to surmount the seemingly impossible trinity of Bitcoin scaling, yet in progressing towards this goal, several challenges remain:

1. Early Stage of Ecosystem Development

   Although the foundational architecture for the BitRGB protocol has been established, with the official roadmap indicating gradual implementation of features like platform asset issuance, asset trading, and user-customized asset issuance, the technical roadmap for smart contract scenarios in the Bitcoin asset context has not been extensively disclosed. Support for Bitcoin asset smart contracts might experience a relatively long developmental process.

2. High Learning Curve for Developers

   BitRGB is built on the RGB open-source protocol, which presents a steep learning curve. Technical documentation related to RGB, such as whitepapers, still requires supplementation and refinement. Developers must extensively learn about Bitcoin RGB and BitRGB. In the early stages of the project, there is a severe shortage of developers with relevant expertise.

3. Verification Efficiency Issues

   Unlike Bitcoin’s global verification, BitRGB utilizes client-side verification, necessitating the recipient’s client to validate transactions, tracing back to the genesis state of the issued asset. This can be time-consuming if the asset has a long transaction history. However, the RGB officials have proposed a solution allowing clients to voluntarily share state transition data of specific contracts, enabling future recipients to begin validating parts of the transaction history in advance. Yet, detailed technical implementation remains undisclosed in the official RGB documentation.

Epilogue

RGBS, as the first inscription asset on RGB, is poised to perfectly embody the value of the RGB protocol. With its enhanced scalability, minimal Bitcoin block space usage, and Bitcoin-friendly characteristics, RGBS is set to become a mainstream potential asset in the Bitcoin ecosystem, bringing more potential opportunities to the Bitcoin community.

Disclaimer：

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