Bitcoin has evolved beyond being a simple payment coin, with new technology now being developed to add layers to the cryptocurrency. The aim is to create a secure system of smart contracts that is scalable and backed by the most secure blockchain. This new technology, called RGB (Really Good Bitcoin), is designed to enhance the capabilities of Bitcoin.
RGB Protocol is a community-driven effort to make technology for building smart contracts widely accessible. The concept was first introduced about a year ago and was discussed in the Bitcoin developers mailing list. What sets this platform apart is its ability to separate smart contracts from the need for a native blockchain. This makes RGB a scalable technology that can be secured through the Bitcoin blockchain.
Unlike other platforms, RGB will not issue its own token or promote any form of investment beyond voluntary support for protocol improvement. It is developed by the community, just like the Bitcoin blockchain and the Lightning network, and aims to popularize its approach.
RGB has received support from well-known developers in the crypto community, although they prefer to remain anonymous. One of the leading developers, @crypcipher, introduced the potential of RGB technology in March, leading to a surge of new applications in the past month.
The core principle of RGB is that all smart contracts will undergo client-side validation, eliminating the need for network consensus. Both parties involved in a smart contract must reach an agreement before the event can be broadcasted to the blockchain. Transactions within an RGB contract will be completely private, with only a hashed number recorded on the blockchain instead of plain text. This ensures that the original RGB contract action cannot be reversed or derived from the hashed value.
In addition to the underlying protocol, RGB is also inspiring a new wave of sub-projects. While the RGB developers themselves do not promote tokens or startups, other developers are using the trend to offer RGB-based products. Including the RGB letters in the project’s name on social media is a way to signal involvement in this new technology, similar to the trend of .eth name handles and personalized addresses.
Participation in the RGB ecosystem begins with updated wallets that are compatible with the Lightning network. RGB projects may also kickstart their marketing with airdrops to generate interest among a wider user base.
The idea of decentralized exchange (DEX) trading using Bitcoin and the Lightning network has been around since the first DeFi boom in 2021. However, this time, all projects are aiming for mass adoption. New wallets are being offered to capture and consolidate other Bitcoin-based trends, such as Ordinals and Runes, as well as BRC20 tokens.
One notable project, RGBEx, is inviting developers to test the generation of new assets and build decentralized trading. The project is also building up test liquidity, starting with USDN, the RGB version of Tether (USDT), to establish the first test trading pairs.
While RGB offers privacy, decentralized exchanges will not be able to track swaps or lock the total value. Additionally, using RGB on the client’s side introduces more complexity, as both parties in a contract must coordinate. Users will also be responsible for storing data related to the state of their RGB assets, which can create a storage burden and require good Internet speed for interactions with other participants or nodes.
