Bitcoin smart contracts new era: RGB protocol leads Web3 future

After more than a decade of vigorous development, Web3 technology has given rise to various innovations. Bitcoin continuously enhances privacy protection capabilities while maintaining decentralization and security, achieving advanced features such as Schnorr signatures and Taproot, which lay the foundation for subsequent technological innovations. The evolution of on-chain smart contracts, represented by Ethereum, has ushered in a golden age of blockchain applications, bringing about two bull markets. However, since 2022, innovation in the Web3 industry seems to have hit a bottleneck, and blockchain technology has been unable to break free from the constraints of the impossible triangle, making large-scale applications difficult to implement.

Against this backdrop, the Bitcoin layer two protocol RGB is quietly maturing, promising to break through existing technological limitations and bring new possibilities to Web3.

Bitcoin: Establishing Its Position as a Currency Layer

The biggest difference between Web3 and Web2 lies in the built-in economic system, and any economic system is based on currency as the foundational layer. The currency of Web3 is called cryptocurrency, issued through blockchain.

Bitcoin is recognized as the safest and most stable cryptocurrency due to its excellent decentralization, consensus mechanism, stability, and community attention, with its value gaining global consensus. The Bitcoin network covers the globe, with over ten thousand full nodes working together, making it difficult for attackers to tamper with transaction history. The powerful hashing computational power serves as the basis for network security under the proof-of-work mechanism. The consensus rules of Bitcoin have not undergone significant changes in history, and this stability helps maintain the consistency and security of the network. The Bitcoin community is extremely focused on the security and stability of the network, and modifications to the core protocol undergo careful discussion and testing.

Ensuring security and simplicity in parallel with Bitcoin scripts

The design intention of the Bitcoin scripting language is to ensure security and avoid potential risks, so it intentionally limits functionality while maintaining simplicity and safety similar to that of a chip instruction set. Bitcoin script is a stack-based execution language based on reverse Polish notation, designed to be executed on limited hardware.

In the mainstream Bitcoin node code, only certain types of transactions referred to as "standard scripts" are allowed to be executed. The most important of these is the P2SH(Pay to Script Hash) transaction, which actually allows any Bitcoin script to be executed, making it possible to perform scripts with certain complex functionalities on Bitcoin. For example, the Lightning Network has become the de facto standard for small, high-frequency Bitcoin payments.

With the introduction of Schnorr signatures and the Taproot soft fork upgrade, Bitcoin has taken an important step, laying the foundation for the development of second-layer protocols.

Schnorr signatures and Taproot

The introduction of Schnorr signatures and Taproot has created new opportunities for Bitcoin. Taproot introduces more flexible payment channels, allowing various types of transactions to be executed on-chain in a more privacy-preserving manner. By hiding complex multi-signature scripts within a single script, Taproot makes various complex transactions appear like regular single-party payments, thereby enhancing privacy and security. The introduction of Schnorr signatures has made transactions on the Bitcoin network more compact, reducing transaction fees and improving scalability.

These two innovations not only enhance the performance and privacy of Bitcoin but also bring more innovative possibilities to the ecosystem. More efficient scripting and signature technologies support cross-chain operations, Lightning Network scalability, and complex smart contracts. This refocuses Bitcoin on the core of Web3, paving the way for the construction of a more secure and efficient decentralized finance and application ecosystem.

The impact of Schnorr signatures

Schnorr signatures are more in line with the essence of Bitcoin signatures compared to ECDSA. Not only do they perform better and have shorter signature lengths, but they also possess linear characteristics that make key aggregation simple. This linear characteristic is easy to understand, as the keys of all participants are aggregated into a new key through a simple mechanism.

Taking a 2-3 multisig transaction as an example, the traditional method requires three public keys and two signatures to initiate a transaction. In the Schnorr signature scenario, on-chain transactions only require one aggregated public key and one signature, significantly reducing the number of transaction bytes, which lowers the transfer cost.

The innovation of Taproot scripts

Taproot is an innovative Bitcoin script structure that defines how to use and parse Taproot-type transaction addresses. The inspiration for Taproot comes from Bitcoin developers' research on the Merkle Abstract Syntax Tree (MAST). With Taproot, Bitcoin UTXOs with multiple different branch scripts can expose only one branch when spent, while the other branches will never appear on the blockchain, significantly enhancing transaction privacy and efficiency.

Taproot has undergone further upgrades in the Segregated Witness framework, with the version number updated to V1, referred to as P2TR( payments to Taproot). By combining Schnorr signatures and Taproot, the construction of multi-signature ( multi-signatures ) is very diverse, such as threshold signatures and Musig trees.

LNP/BP: "Bitcoin protocol/Lightning Network protocol" maturity

The LNP/BP Standard Association has been quietly working behind the scenes, bringing more innovative possibilities to the Bitcoin ecosystem. The LNP/BP codebase covers standards and best practices for Bitcoin Layer 2 and above, defining the fundamental building blocks for Layer 2 and above solutions, and describing complex use cases built on these modules. This provides possibilities for financial assets, storage, messaging, computing, and more, as well as for secondary markets utilizing the Bitcoin security model and Bitcoin as a means of payment/exchange.

Status Channel Same Stage Transaction Overview

Funding Transactions( are the initial transactions used to create payment channels in the Lightning Network. Partially Signed Bitcoin Transactions) (PSBT) is a special format of Bitcoin transaction that allows multiple participants to collaboratively construct and sign transactions. State-based Bitcoin Transactions( (BSBT) are transactions used in the Lightning Network to build and update channel states.

) The key technology of the Lightning Network supports RGB smart contracts.

The Lightning Network is a second-layer solution built on Bitcoin that allows users to make fast, low-cost transactions through a series of payment channels. Bidirectional channels, as a special type of payment channel, enable two participants to engage in bidirectional real-time interaction. Point Time-Locked Contracts ( PTLC ) address the privacy issues of HTLCs. Eltoo introduces state numbering, ensuring that only the latest state is recognized and recorded on the blockchain. Discrete Log Contracts ### DLC ( address scalability and privacy issues while also trying to minimize the trust requirements for oracles providing external data. SPHINX is a tool used to ensure secure communication, requiring the payer to create multiple layers of encryption.

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Leading Change: Exploring the Mission of the RGB Protocol

RGB, as a powerful protocol, aims to combine the characteristics of Bitcoin as a base currency layer with the flexibility of smart contracts. Through RGB, we can create and manage various assets on the Bitcoin network, enabling broader financial and application innovations.

) Interpretation of RGB smart contracts

RGB smart contracts can be briefly summarized by two core elements: ownership ( ownership ) and state validation ### state validation (. RGB smart contracts can be viewed as a distributed network where no one has a complete view of the current state, but due to the one-time sealing technology based on Bitcoin proof of work ) PoW ( and the same client validation rules, it still maintains consistency globally.

In RGB smart contracts, rights management involves defining specific types of operations that can only be executed by the party that holds a specific part of the smart contract's state. These operations include, but are not limited to, asset ownership, identity ownership, asset supply issuance rights, sub-identity creation rights, asset trimming/destruction rights, etc.

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) When Web3 meets RGB

The technological innovation brought about by RGB smart contracts introduces a new paradigm of smart contracts that empowers users with the capability of rights management, ranging from asset ownership and identity ownership to the right to issue additional assets, providing greater flexibility. RGB smart contracts attempt to address the issues of old states by introducing the concept of state numbering, which is expected to enhance system efficiency and security, offering stronger guarantees for contract transfers and state transitions.

Unlocking Infinity: A New World Analogous to TCP/IP

The gradual implementation of proposals such as Schnorr signatures and Taproot in the Bitcoin network, along with the continuous maturation of layer two protocols centered around LNP/BP and RGB, paints an exciting future for us. This pattern will be based on the LNP/BP protocol, presenting a layered structure similar to the architecture of TCP/IP, organically integrating the three key levels of the currency layer, protocol layer, and application layer.

The development of the LNP/BP protocol and RGB has brought scalability and efficiency improvements, enhanced privacy and security, richer functionalities, reduced blockchain burden, and created a broader innovation space for developers within the Bitcoin network.

The development history of TCP/IP

The development history of the TCP/IP protocol stack has gone through a process from its initial fragmentation to complexity, and finally to standardization and ease of use. From the establishment of ARPANET in 1969, to the proposal of the TCP protocol in 1972, to the standardization of the IPv4 protocol in 1977, and finally to the invention of the World Wide Web in 1989, the development of the TCP/IP protocol stack provides a reference for our understanding of the development of Web3.

Captivating narrative

The correct development path of Web3 is built on a more complex foundation of decentralized technology and cryptography. This development path evolves with the advancement of protocols such as LNP/BP and RGB. Infinitas, as an innovative solution based on a series of Bitcoin smart contracts, deeply expands upon the foundations of protocols like LNP/BP and RGB, and will achieve core technologies such as universal payment addresses, the Contractum language smart contract development environment, the immutability of schema(, and multi-level secure storage of verification data based on RGB clients.

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The Brilliant Future of Web3 Development

As the LNP/BP protocol and RGB protocol continue to mature, people's infinite imagination about the metaverse is becoming a reality, and the Web3 world will become richer and more diverse. We will soon see the large-scale adoption of decentralized finance, the emergence of blockchain games, diversified social applications on-chain, deep integration with AI, and fusion with wearable devices and sensors.

The RGB protocol places us at a brand new starting point, witnessing a future with infinite possibilities like Bitcoin. We look forward to a more open, inclusive, and innovative Web3 future that this will bring.

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