The next narrative of BTC asset revival, why should we pay attention to the RGB protocol?

Original title: "BTC asset renaissance, why should we pay more attention to the RGB protocol?" "

Original author: 0xmin & David

Original source: TechFlow deep tide

Ordinals and BRC-20 have successfully started the "issuing assets on Bitcoin" trend, but apparently it may not be the last.

If asset issuance on Bitcoin becomes a new narrative, then in Under the premise of minimizing the burden on the Bitcoin main network, will we have a more feasible and friendly way?

Therefore, a recent agreement that has been silent for many years has once again aroused discussion—— "RGB", a protocol that enables the creation and management of digital assets on the Bitcoin network, often appears with the concept of Bitcoin's second layer such as the Lightning Network.

What exactly is the RGB protocol? Could it lead to a true renaissance in BTC asset issuance?

Ancient RGB, focus on BTC asset issuance

Issuing assets on the Bitcoin network has actually been thought of very early.

The origin of the RGB protocol can be traced back to 2018 when Giacomo Zucco, Peter Bitcoin community members such as Todd and Alekos Filini began discussing a new method of creating and managing assets on the Bitcoin network. Their goal is to design a protocol that can take advantage of Bitcoin's security and decentralization properties, while supporting more complex features such as asset issuance and smart contracts.

In order to achieve this Aiming at this goal, they began to study how to combine asset and state information with Bitcoin's UTXO model, and proposed a new protocol called RGB. Its core idea is to combine asset issuance, ownership and status updates through client-side verification with Bitcoin's UTXO model, instead of relying on full nodes of the Bitcoin network like the current BRC-20.

As for why it is called "RGB", you can easily think of the three primary colors RGB. In fact, the initial research direction of the RGB protocol is "colored coins", so the concept related to color is used. Although what the current RGB protocol does has little to do with dyed coins, the name has been retained.

As you can see in its Github directory, the RGB interpretation is for Bitcoin and Lightning The network provides scalable private smart contracts, creating the possibility of issuing assets in the Bitcoin network.

It was only because of the rise of Ethereum and Bitcoin that it was considered more of a store of value and The currency vane, the practice of issuing assets and creating contracts on Bitcoin has been in a tepid state.

Until the recent popularity of BRC-20, Bitcoin assets were issued again The old tune is repeated. Compared with the former inscription system directly on the chain, RGB uses more off-chain processing logic somewhat similar to the Lightning Network.

Bind asset status with UTXO

The implementation of the RGB protocol is actually not difficult to understand, the core lies in the accounting method of Bitcoin itself——UTXO.   

A simple example: A has 10 bitcoins, sent 5 to B, and has 5 left. A simple description with UTXO is as follows:

• UTXO 1: A has 10 BTC< /li>
• UTXO 2: A has 5 BTC left
• UTXO 3: B has 5 more BTC< /li>

It can be seen that UTXO is recording the transaction status changes on the Bitcoin chain. After the transaction is completed, A has 5 BTC left, and the previous 10 The status of each BTC is different. Correspondingly, UTXO1 is actually split into 2 new states: 5 change for yourself (UTXO2), and 5 change for others (UTXO3).

After understanding this principle, RGB actually issues assets under the chain , make a binding with the UTXO change on the chain:

Since UTXO can Confirm the transaction event of Bitcoin at a certain point in time, then we can make the change of this transaction event correspond to the change of the state of some other things;

For example, I issued an asset in another place, corresponding to UTXO1 on the Bitcoin network. If I transfer this asset to others, then this "transfer" behavior can be mapped to UTXO2 on the Bitcoin network....

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Because UTXO itself is fixed and consensus, as long as I can prove that this binding is reliable, then the change of UTXO on the Bitcoin mainnet corresponds to other assets State changes should also be agreed upon.

Furthermore, the RGB protocol is using the Bitcoin main The security of the network UTXO endorses the security of asset issuance or contract logic under its chain.

If you find it difficult to understand, take a look at Twitter users < a href="https://twitter.com/trustmachinesco" rel="noopener noreferrer" target="_blank" style="color: rgb(1, 55, 254);">@trustmachinesco  An example:

Matt issued 100 $ on the RGB network MATT coins to yourself;

On the Bitcoin network, Matt Issuing coins corresponds to the UTXO A of his current Bitcoin holdings;

Matt transferred 50 $MATT coins to Pam;

On the Bitcoin network, Matt Coin transfer corresponds to a new UTXO B, and UTXO A in step 2 is destroyed at the same time;

On the Bitcoin network, Pam getting coins corresponds to a The new UTXO C means that Pam currently holds Bitcoin UTXO;

Similarly, when Pam transfers coins, his original UTXO C will also be destroyed to form a new UTXO D....

If this $Matt coin has been transferred in different hands, eventually there will be a The UTXO corresponding to these transfers is used to identify, and each current transfer will cause the original UTXO to be destroyed and a new UTXO will be generated.

Through this process, we can see how the creation, transfer and verification of assets in the RGB protocol are related to the bit The UTXOs of RGB assets are associated together.This association enables safe, decentralized and privacy-protected transfer of RGB assets on the Bitcoin network.

one-time stamp and commitment

The above is a very simple technical detail of RGB implementation. In fact, it is necessary to ensure that the assets issued by RGB under the chain can indeed be aligned with the UTXO on the chain , but also need to cooperate with some other technologies to achieve.

Client-side validation: In the RGB protocol, transaction validation and data storage is done on the client side (such as wallet software) rather than on the blockchain. This The transaction data is not disclosed on the chain, thereby improving privacy. Client verification can also reduce the data storage requirements on the chain and improve the scalability of the network.

This It is also a big difference between RGB and BRC20 at present. Since the transaction data is on the client rather than on the chain, it can theoretically greatly reduce the current network congestion and high transaction fees.

Single-Use-Seals: One way to ensure Technology that prevents asset ownership from being tampered with. A one-time seal is a cryptographic signature used to lock the state of an asset. When assets are transferred, old seals are destroyed and new ones are created. This way, any attempt to tamper with the ownership of the asset will be detected because the state of the seal does not match.

This also corresponds to the destruction and generation of UTXO described in the previous section. The old seal represents the old UTXO, and the new seal points to the new UTXO.

Commitments< /strong>: To link assets to the Bitcoin network, the RGB protocol uses a technique called commitments. A commitment is a cryptographic proof that an asset is associated with a specific Bitcoin transaction. Commitments are embedded in Bitcoin transaction outputs (UTXOs), which allow assets to be transferred across the Bitcoin network.

Anchoring : In order to connect client-side verification with the Bitcoin network, the RGB protocol uses anchoring technology. Anchoring is the process of bringing together a one-time stamp and commitment. As assets are transferred, new one-time stamps, commitments, and transaction data are anchored to the Bitcoin network, ensuring the security and consistency of the entire system.

Here, the author gives a more realistic RGB protocol workflow:

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The asset issuer creates a new asset on the client side and generates a one-time stamp and commitment.

The asset issuer anchors the new asset to the Bitcoin network, and the Commitments are embedded in the outputs (UTXOs) of Bitcoin transactions.

The recipient of the asset verifies the asset’s identity by viewing the promise and verifying the one-time stamp effectiveness.

When assets are transferred, the old one-time stamp is destroyed and the new one Sex seals, commitments, and transaction data are anchored to the Bitcoin network.

In this way, the RGB protocol implements The functions of asset issuance, transfer and verification, while maintaining the characteristics of privacy, scalability and decentralization.

At the same time, RGB can also be well combined with the Lightning Network. In its official documents, RGB describes itself as an L2 or L3; when the Lightning Network exists, RGB can be used as an L3 to quickly exchange Bitcoin and RGB tokens under the chain to achieve more efficient Trading and asset management.