RGB Protocol, like Ethereum, is a Turing-complete smart contract platform based on Bitcoin.

Authors: Echo, BiHelix

The RGB protocol, representing "Really good for Bitcoin," was initially aimed at improving Colored Coins, a second-layer (L2) and third-layer (L3) protocol based on smart contracts, built on top of the Bitcoin base layer (LNP/BP) and the Lightning Network, with the goal of expanding Bitcoin transactions and providing enhanced transaction privacy.

RGB was initially proposed by Peter Todd and Giacomo Zucco in 2016. Since mid-2019, the main contributors to the project have been Dr. Maxim Orlovsky and Pandora Core AG. Based on the standards established by Dr. Orlovsky and Dr. Zucco in 2019 through the Swiss non-profit organization LNP/BP Standards Association, the RGB protocol launched on the mainnet in June 2023.

The RGB Protocol, like Ethereum, is a Turing-complete smart contract platform based on Bitcoin. This means that developers can build complex smart contracts, enabling the issuance of fungible and non-fungible tokens, as well as the creation of decentralized applications (dApps) and decentralized autonomous organizations (DAOs). This article will focus on representative projects in various potential subfields based on the RGB protocol.

DAO - LNP/BP Association

LNP/BP stands for "Bitcoin Protocol/Lightning Network Protocol." The core team of the RGB protocol has established a non-profit organization, LNP/BP Association, to oversee the development of various layers of Bitcoin. The association's mission is to standardize the creation and maintenance of standards, develop libraries, nodes, and tools, implement open-source participation, conduct community education, and ensure consistent community values. The association's values include resistance to censorship, privacy, and layering.

The LNP/BP Association's products cover three main verticals:

• Bitcoin Protocol (BP);
• Client-side validation enhancements for Bitcoin components, Lightning Network Protocol (LNP);
• Generalization of the Lightning Network to support advanced features, smart contracts (such as RGB), enabling programmability of client-side validation.

Currently, the only official way to join is through contributions, allowing any for-profit company, non-profit organization, DAO, or individual to become a member of the association. Any entity or individual willing to become a member should contribute, which may include financial contributions and contributions to the association's projects, standards, and designs.

https://www.lnp-bp.org/

NFT (UDA) MarketPlace - DIBA

While NFTs became a focal point of attention at the end of 2020, many are not familiar with the origin of art and assets on the blockchain starting from Bitcoin— from the 2011 "Message from the Mines" to the "Colored Coins Proposal."

DIBA is the first marketplace to create, collect, and trade NFTs directly on Bitcoin using the UTXO model and the RGB protocol (Bitcoin smart contract protocol), building decentralized applications on Bitcoin and the Lightning Network. Founder Gideon Nweze said, "Bitcoin art is a Trojan horse that will bring real utility to the future financial system… It will drive the widespread adoption of uncensored digital property. When we build the future in a decentralized, transparent, and honest way, art will be a common ground for everyone around the world."

Artists can create digital assets on Bitcoin through DIBA. "Using art as a key to change and adoption is a well-known movement, and I believe that in the future, everyone will have an equal opportunity to own valuable unique digital assets and participate in economic activities while running their own Lightning nodes," said Gideon Nweze.

The DIBA ecosystem allows users to collect digital artists directly bound to Bitcoin UTXOs (unspent Bitcoin transaction outputs) using RGB's client-validated smart contract system through a non-tokenized Bitcoin 2nd layer scaling solution. The DIBA ecosystem is contributed to by the LNP/BP Standards Association and Dr. Maxim Orlovsky and Dr. Olga Ukolova (Pandora Core) collaborating with the organization.

All digital assets are compatible with the Taproot upgrade (the most significant upgrade to the Bitcoin network since 2017, which enhances Bitcoin's privacy, smart contract functionality, and reduces transaction costs).

Infrastructure - BiHelix

In a private email conversation with members of the Bitcoin community in 2010, Satoshi Nakamoto wrote, "I am very confident that in 20 years, Bitcoin will either achieve full-scale application or have zero transaction volume."

BiHelix is a Bitcoin-native blockchain-based infrastructure that optimizes nodes using the RGB protocol and the Lightning Network. With the goal of enabling Bitcoin to achieve full-scale application, BiHelix combines the Lightning Network to introduce business models and incentive mechanisms for RGB, driving the engineering implementation of the RGB protocol. By establishing a smart contract platform, it solves the long-standing "non-Turing complete" issue of Bitcoin scripts, enabling more applications to run on the Bitcoin blockchain. As the first infra built on the RGB protocol, it aims to create a more fair decentralized encrypted world for miners, validators, node service providers, exchanges, and users.

Implementation includes:

• Optimizing the RGB protocol for better compatibility with the Lightning Network to increase Bitcoin blockchain scalability.
• Utilizing native economic incentives and business to attract miners and developers to develop smart contracts on BiHelix.
• Optimizing the integration between RZK (recursive zero-knowledge), storage, communication protocols, and the RGB protocol to make it a complete underlying ecosystem.

Wallet - Bitmask

BitMask is an open-source, multi-signature Bitcoin wallet that emphasizes privacy, security, and decentralization. It allows users to retain control of their private keys while still enjoying the convenience of a web wallet.

Key features:

• Multi-signature security - BitMask uses a 2-of-3 multi-signature setup. Transactions require 2 signatures to be valid, protecting funds in case one key is compromised.
• Hierarchical Deterministic (HD) key generation - Keys are derived from a root seed in a tree structure, allowing for the generation of unlimited addresses while only needing to back up the seed.
• Decentralized validation - Transactions are validated on the client side, not on BitMask's servers, for improved privacy.
• Tor integration - All traffic is routed through Tor to hide the user's IP address.
• Open-source code - BitMask's code is fully open-source for transparency and auditing.
• Encryption technology - User data is encrypted using AES-256 symmetric encryption and RSA-2048 asymmetric encryption.

Advantages of BitMask include allowing users to control their own keys, off-chain transaction validation for privacy protection, and multi-signature security to prevent theft or loss. It aims to attract users who prioritize higher security and privacy than traditional centralized web wallets, and is the earliest and largest contributor to the RGB protocol overall.

RGB Explorer - RGBex

Supports searching for RGB smart contracts on Bitcoin and the Lightning Network by code/asset name/contract ID/schema ID/interface name.

Main features include:

• Asset interfaces: RGB smart contracts provide API interfaces for interaction with the world through wallets, exchanges, and other software. They define the types of assets and contracts, such as tokens, NFTs, DAOs, identities, etc.
• Smart contract Schemata: Create "templates" for smart contracts and asset issuance. They allow the roles of programmers to be separated from the roles of contract and asset issuers, reducing the risk of designing contracts.
• Issuance methods: RGB smart contracts can be developed in Rust using the RGB standard library.

Conclusion

Although the RGB protocol is still in the early stages of development, time will tell us that compared to more popular Bitcoin protocols centered around L2 smart contracts, RGB leverages the strong security and decentralization of Bitcoin to provide users with a more reliable asset issuance solution. This deep integration creates a more transparent, trustless asset issuance process for users, potentially bringing higher reliability to the ecosystem. Its synergistic effect with Bitcoin and its advantages in asset issuance and DeFi make it an indispensable part of the Bitcoin ecosystem. We can look forward to how the RGB protocol will demonstrate stronger value propositions in promoting asset issuance and DeFi within the Bitcoin ecosystem, playing a more important role in bringing innovation and prosperity to the Bitcoin ecosystem in the future.

Reference

https://github.com/LNP-BP/layer1

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