Crypto
Bitcoin Is Mathematically Perfect With Patterns Of The Universe
This is an opinion editorial by Ella Hough, a student at Cornell University, pursuing degrees in cognitive science and moral psychology.
Recently, I’ve been looking into some of the numbers associated with Bitcoin. While I haven’t exactly come to an overarching conclusion, I find the very common presence of 0, 1, 2, and 6 together fascinating, along with 3 and 9.
The reason for my fascination came after reading the following quote and explanation of Nikola Tesla’s theory that “If you only knew the magnificence of 3, 6, and 9, then you would have a key to the universe.”
I believe Bitcoin is the “key” to solving many of the issues humanity faces, but I was curious if math thought so too.
Also, possibly irrelevant but still interesting is the lack of 2* or 8 being a solution to any of the equations outlined below.
Note: In all instances throughout this article, I add the numerals until I reach 1 digit.
Let’s use the date this was written as an example: August 9, 2022.
08 + 09 + 2022 = 2039
2 + 0 + 3 + 9 = 14
1 + 4 = 5
Answer = 5
0, 1, 2 And 6
6102. 2,016. 21 and 6 zeroes. 21st century.
Question: 0, 1, 2, and 6. What do these numbers have in common?
Answer: Bitcoin.
“Executive Order 6102 is an executive order signed on April 5, 1933, by US President Franklin D. Roosevelt “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States.” Executive Order 6102 required all persons to deliver on or before May 1, 1933, all but a small amount of gold coin, gold bullion, and gold certificates owned by them to the Federal Reserve in exchange for $20.67 (equivalent to $433 in 2021) per troy ounce” — Executive Order 6102
6 + 1 + 0 + 2 = 9
04 + 05 + 1933 = 1942 → 1 + 9 + 4 + 2 = 16 → 1 + 6 = 7
05 + 01 + 1933 = 1939 → 1 + 9 + 3 + 9 = 22 → 2 + 2 = 4
2 + 0 + 6 + 7 = 15 → 1 + 5 = 6
4 + 3 + 3 = 10 → 1 + 0 = 1
2 + 0 + 2 + 1 = 5
“Bitcoin’s mining difficulty is updated every 2,016 blocks. This is why each 2,016 block interval is called the difficulty epoch, as the network determines whether the activities of miners for the last two weeks have reduced or increased the time it takes to mine a new block” — Andrey Sergeenkov
2 + 0 + 1 + 6 = 9
This bitcoin mining difficulty update every 2,016 blocks is a palindrome of 6102.
There are 21,000,000 bitcoin.
2 + 1 + 6 zeroes = 9
If you would rather not count “6 zeroes”:
2 + 1 = 3
I believe it is no accident there are 21,000,000 bitcoin. I believe the connection between 0, 1, 2 and 6 is purposeful. I believe the fact that bitcoin’s mining difficulty is updated every 2,016 (a reverse of 6102) blocks shows a reversal in history, that your property is yours, no one can take it from you, and a reversal in precedent that the money supply is not something that can always be increased.
Decentralized and available to be used and held by every person on Earth, bitcoin is sound money. Furthermore, as Saifedean Ammous asserts in “The Bitcoin Standard,”
“Sound money… protects value across time, which gives people a bigger incentive to think of their future …When economic decision making is geared toward the future…People become more peaceful and cooperative…People develop a strong sense of morality, prioritizing the moral choices that will cause the best long-term outcomes for them and their children.”
This reality described is the final proof as to why I believe bitcoin of 21 and 6 zeroes are tools for the 21st century and will bring about positive change.
Facts
21st century → 2 + 1 = 3
October 31, 2008: The Bitcoin white paper was published, sparking an “Economic Reformation.”
10 + 31 + 2008 = 2049 → 2 + 0 + 4 + 9 = 15 → 1 + 5 = 6
October 31, 1517: Martin Luther publishes the “Disputation on the Power and Efficacy of Indulgences,” also known as “The 95 Theses,” a list of questions and propositions for debate, sparking the Protestant Reformation.
10 + 31 + 1517 = 1558 → 1 + 5 + 5 + 8 = 19 → 1 + 9 = 10 → 1 + 0 = 1
January 3, 2009: The genesis block is mined and the Bitcoin network was created.
01 + 03 + 2009 = 2013 → 2 + 0 + 1 + 3 = 6
January 3, 1521: “Pope Leo X issues the papal bull Decet Romanum Pontificem, which excommunicates Martin Luther from the Catholic Church.” (Source)
01 + 03 + 1521 = 1525 → 1 + 5 + 2 + 5 = 13 → 1 + 3 = 4
February 2140: Last bitcoin mined — 02 + 2140 = 2142 → 2 + 1 + 4 + 2 = 9
Time duration of bitcoin mining: 2140 – 2009 = 131 years → 1 + 3 + 1 = 5
Time duration of Protestant Reformation: 1648 – 1517 = 131 years → 1 + 3 + 1 = 5
The panic of 1893: The Gilded Age, a time of prosperity after the gold standard was restored, was interrupted once in 1893. Congress was convinced by newly inaugurated President Grover Cleveland to repeal silver purchased by the Treasury. The 21 below symbolizes that the 21 million bitcoin will prevent such chaos from ensuing again.
1893 → 1 + 8 + 9 + 3 = 21 → 2 + 1 = 3
Stock market crash of 1929: 36 years later, the lesson of increasing the money supply had still not been learned when “Benjamin Strong, chairman of the New York Federal Reserve … engaged in inflationary monetary policy … creat[ing] a larger bubble in the housing and stocks markets and priming the U.S. economy … for the inevitable collapse.” (Ammous). The collapse did come and began “the longest depression in modern recorded history” lasting 120 months (Ammous).
1929 → 1 + 9 + 2 + 9 = 21 → 2 + 1 = 3
120 → 1 + 2 = 3
December 10, 1948: The Universal Declaration of Human Rights was adopted by the UN General Assembly.
2008 – 1948 = 60 → 6 + 0 = 6
January 27, 1947 through February 10, 1947: Commission on Human Rights, First Session. The Commission on Human Rights was made up of 18 members from various political, cultural and religious backgrounds.
18 → 1 + 8 = 9
1947 → 1 + 9 + 4 + 7 = 21 → 2 + 1 = 3
Universal Declaration of Human Rights Article 21 states:
- Everyone has the right to take part in the government of his country, directly or through freely chosen representatives.
- Everyone has the right of equal access to public service in his country.
- The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections which shall be by universal and equal suffrage and shall be held by secret vote or by equivalent free voting procedures.
July 26, 1947: Department of Defense Established
07 + 26 + 1947 = 1980 → 1 + 9 + 8 + 0 = 18 → 1 + 8 = 9
1947 → 1 + 9 + 4 + 7 = 21 → 2 + 1 = 3
In Satoshi Nakamoto’s Bitcoin white paper, the word “network” is mentioned exactly 21 times. Regardless of whether this was a purposeful action by Nakamoto, I choose to believe it speaks to the immense power Bitcoin holds to foster connection.
21 → 2 + 1 = 3
ASCII (And Unicode) Observations
- ASCII: “American Standard Code for Information Interchange, a standard data-encoding format for electronic communication between computers. ASCII assigns standard numeric values to letters, numerals, punctuation marks and other characters used in computers. Before ASCII was developed, different makes and models of computers could not communicate with one another.” (Source)
- Unicode: “However, even extended ASCII does not include enough code combinations to support all written languages. This limitation gave rise to new encoding standards — Unicode and UCS (Universal Coded Character Set) — that can support all the principal written languages. Because it incorporates ASCII as its first 128 code combinations, Unicode (specifically UTF-8) is backward-compatible with ASCII while also representing many characters that ASCII cannot. Unicode, which was introduced in 1991, saw its usage jump sharply in the first decade of the 21st century, and it became the most common character-encoding system on the World Wide Web.” (Source)
Computers can only process binary information (0s and 1s), and the smallest unit of information is called a bit (hence, bitcoin). The ASCII Code was created to encode characters using 8 bits (a string of eight 0s and 1s).
Given how foundational the number 8 is to computers, I find it incredibly interesting that 8 is not a solution to any of the equations in this article.
However, ASCII is limited to only 256 characters. Unicode was created to be universally inclusive and covers 128,000-plus characters.
To analyze text in computer code, you need to relate each character to binary. This relation is done by giving each letter a decimal value.
Let’s pause, for a moment, and explain how this decimal value is acquired.
- Each bit in the string of 8 bits can either be “in use” or “not in use.” 0 = off and 1 = on.
- Each bit represents a power of 2:
- 2^7, 2^6, 2^5, 2^4, 2^3, 2^2, 2^1, 2^0
- 2^7 = 128
- 2^6 = 64
- 2^5 = 32
- 2^4 = 16
- 2^3 = 8
- 2^2 = 4
- 2^1 = 2
- 2^0 = 1
Example: The letter “b” has a decimal value of 98.
What combination of 128, 64, 32, 16, 8, 4, 2, and 1 equals 98?
128 is too large, so let’s turn that “off.” Right now, our string of 8 bits looks like: 0XXXXXXX.
Now, let’s look for the largest powers of 2:
98 = 64 + … ?
= 64 + 32 + …?
= 64 + 32 + 2
Ok, so: 2^6, 2^5, and 2^1 can be turned “on.”
Now, our string of 8 bits looks like this: 01100010.
However, let’s say we were given the binary, not the decimal value. The value at 2^7 has a 0, so that means it is turned off; 128 is not in our equation; 2^6 has a 1, so that means it is turned “on”; 64 is in our equation. Follow this pattern, and your summation will equal 98.
Given Bitcoin’s relationship to the core of computers (through “bit”), I analyzed the letters of important words in Bitcoin (by using their decimal values from the chart above) in search of 3s, 6s and 9s.
“Satoshi Nakamoto.”
There are 15 letters in “Satoshi Nakamoto.” Adding the numerals 1 + 5 , you obtain the answer 6.
15 → 1 + 5 = 6
Now, using the ASCII decimal values from the chart above:
83 + 97 + 116 + 111 + 115 + 104 + 32 (space) + 105 + 78 + 97 + 107 + 97 + 109 + 111 + 156 + 111 = 1629
1629 → 1 + 6 + 2 + 9 = 18 → 1 + 8 = 9
“satoshi nakamoto”
115 + 97 + 116 + 111 + 115 + 104 + 32 (space) + 105 + 110 + 97 + 107 + 97 + 109 + 111 + 156 + 111 = 1693
1693 = 1 + 6 + 9 + 3 = 19 = 10 = 1
“Martin Luther”
There are 12 letters in “Martin Luther.” Adding the numerals 1 + 2 , you obtain the answer 3.
12 → 1+ 2 = 3
Now, using the ASCII decimal values from the chart above:
77 + 97 + 114 + 116 + 105 + 110 + 32 (space) + 76 + 117 + 116 + 104 + 101 + 114 = 1279
1279 → 1 + 2 + 7 + 9 = 19 → 1 + 9 = 10 → 1 + 0 = 1
“martin luther”
109 + 97 + 114 + 116 + 105 + 110 + 32 (space) + 108 + 117 + 116 + 104 + 101 + 114 = 1343
1343 → 1 + 3 + 4 + 3 = 11 → 1 + 1 = 2
*The one exception to “2” not being a solution.
Now, as I looked at the words “bitcoin,” “bitcon” (no repeated letters), “BITCOIN,” and “BITCON” (no repeated letters), I experimented, calculating the sums horizontally (as you’ve previously seen me do), vertically (simplifying all individual decimal values to one digit) and when repeated, letters/numbers were removed.
“bitcoin”
98 + 105 + 116 + 99 + 111 + 105 + 110 = 744 → 7 + 4 + 4 = 15 → 1 + 5 = 6
^
8 + 6 + 8 + 9 + 3 + 6 + 2 = 42 → 4 + 2 = 6
^
8 + 6 + 9 + 3 + 2 = 28 → 2 + 8 = 10 → 1 + 0 = 1 (w/ no repeated #s)
“bitcon” (w/ no repeated letters):
98 + 105 + 116 + 99 + 111 + 110 = 639 → 6 + 3 + 9 = 18 → 1 + 8 = 9
^
8 + 6 + 8 + 9 + 3 + 2 = 36 → 3 + 6 = 9
^
8 + 6 + 9 + 3 + 2 = 28 → 2 + 8 = 10 → 1 + 0 = 1 (w/ no repeated #s)
“BITCOIN”
66 + 73 + 84 + 67 + 79 + 73 + 78 = 520 → 5 + 2 + 0 = 7
^
3 + 1 + 3 + 4 + 7 + 1 + 6 = 25 → 2 + 5 = 7
^
3 + 1 + 4 + 7 + 6 = 21 → 2 + 1 = 3 (w/ no repeated #s)
BITCON (w/ no repeated letters):
66 + 73 + 84 + 67 + 79 + 78 = 447 = 15 → 1 + 5 = 6
^
3 + 1 + 3 + 4 + 7 + 6 = 24 → 2 + 4 = 6
^
3 + 1 + 4 + 7 + 6 = 21 → 2 + 1 = 3 (w/ no repeated #s)
BTC
66 + 84 + 67 = 217 → 2 + 1 + 7 = 10 → 1 + 0 = 1
Yes, BTC is #1.
Conclusion
A few months ago, I saw the reappearance of 0, 1, 2 and 6 in core elements of Bitcoin as too purposeful to be a coincidence. Curious about other symbolic elements of Bitcoin, hidden in numbers, I started a running note of important dates and people related to Bitcoin.
This article showcases the first 45 summations of that note, analyzed to see if bitcoin has a connection to 3, 6 and 9, supposedly the keys to the universe. Let’s look at a tally:
3: 11 times
6: 9 times
9: 9 times
1: 7 times
5: 3 times
7: 3 times
4: 2 times
2: 1 time
8: 0 times
3, 6, and 9: 29 times = 64%.
My answer is yes. Bitcoin does have a connection to 3, 6 and 9. From these numbers, which are selective, math thinks Bitcoin is 64% of the key to the universe. However, I still believe bitcoin is the key to solving many of the issues our world faces; it is our number one tool, and maybe math really does think so, too: 64 → 6 + 4 = 10 → 1 + 0 = 1.
This is a guest post by Ella Hough. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.
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.
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.
I don’t.
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.
Get real.
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.
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.
Source: Title deed of unregistered real estate propriety
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.
Conclusion
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.
