Crypto
Failure Of FTX: The Evil Results Of ‘Altruistic’ Intentions
This is an opinion editorial by Captain Sidd, a finance writer and explorer of Bitcoin culture.
If you haven’t heard, one of the largest crypto exchanges, FTX, was the latest in a number of dominos to fall in the crypto “industry.”
The founder of that exchange, Sam Bankman-Fried, had evolved into a media darling over the past two years — gracing the cover of Fortune magazine and earning interviews with the likes of CNBC and Bloomberg. SBF, as he’s often referred to, studied physics at MIT and spent time at the renowned arbitrage trading firm Jane Street. He styled himself as the nerdy gigabrain, with a messy mop of hair and a penchant for sleeping in the office while building a financial empire just so he could donate it all to charity.
With the collapse of FTX and the closely-associated Alameda Research fund, the pessimistic view of SBF paints him as a scammer. He very well could have tricked investors and millions of retail clients by eschewing the classic, slick crypto con-man with his nerdy veneer and boyish face. Another theory points to his ties to U.S. regulatory agencies and the fact that he was the second-largest donor to President Biden’s 2020 campaign: perhaps SBF was a government plant. Maybe the fall of FTX was all part of a plan, providing a perfect “emergency” to usher in regulation of Bitcoin and other decentralized tools that threaten the existing world order.
As more information comes to light day by day, there are many data points to support the view of SBF and his cadre as nefarious fraudsters. However, the point of this article is not to take that view and tear them apart. The point of this article is to take the view that SBF and his crew were talented, ambitious and altruistic entrepreneurs who made several, admittedly large, mistakes out of their own desire to make the world a better place.
Why take this view? What it suggests about other presumably benevolently-led organizations is damning. This view reveals a critical insight about the state of leadership in our world today and what we can do to fix it — before the world economy we all depend on suffers the same fate as FTX.
SBF The Altruist
In many of Sam Bankman-Fried’s media appearances, he mentioned his belief in a philosophy known as “effective altruism.” The media ate it up, often running with headlines emphasizing that he wanted to give away his fortune to charity and maximize the amount of good he brought to humanity with his actions.
In his own view then, SBF’s support of struggling “decentralized” financial protocols, donations to mostly left-leaning political candidates and talks with DC politicians about crypto regulatory approaches were the best ways to harness his time and intellect for the greater good. But SBF’s quantitative mind seems to have led him out further than most in his pursuit of good.
As Sequoia Capital, one of the most prestigious venture capital firms and an investor in FTX, stated in its glowing profile of SBF: “To do the most good for the world, SBF needed to find a path on which he’d be a coin toss away from going totally bust.”
That profile, published just six weeks before FTX’s swift implosion, was titled “Sam Bankman-Fried Has a Savior Complex — And Maybe You Should Too” with the subtitle “The founder of FTX lives his life by a calculus of altruistic impact.”
That mentality of risking it all to accelerate the impact he could have on the world may have led him to take on debt he couldn’t repay and ultimately use funds earmarked for users in order to further his goals. SBF’s gambles may reflect his own rigorous, mathematical take on the vague mantra behind the effective altruism movement: “Effective altruism is a project that aims to find the best ways to help others, and put them into practice.”
Even though this behavior led to a coin-toss scenario — get huge or go bankrupt — SBF was clear throughout in his belief that this was the impact-maximizing path for humanity. Maybe to him, it was worth the risk if it helped the traditional financial system decentralize more quickly.
However, outside SBF’s mind and calculus, what he did looks remarkably different.
The Altruistic Fraudster
In the world occupied by those who SBF claimed he wanted to help, we find utter devastation from his reckless actions. No matter his intentions, millions of retail traders were left locked out of the FTX exchange overnight, just after SBF publicly announced that “Assets are fine.” Not even 24 hours later, SBF deleted that tweet and replaced it with a misleading message that Binance agreed to acquire FTX to solve “liquidity crunches.”
Over the following few days, the massive hole in FTX and its associated companies became starkly apparent. Several users may have bribed FTX in order to withdraw funds when FTX falsely claimed only Bahamian residents could withdraw. Later, information came to light that SBF had a backdoor in to FTX’s accounting system, allowing him to move funds without alerting others.
The pedigree attained by SBF and FTX drew in investors and lenders from across the financial ecosystem, from major VC firms like Sequoia Capital to the Ontario Pension Fund. FTX’s failure thus caused painful markdowns for many of those investors, and no doubt a number of further implosions in what may resemble a 2008-style contagion event. The crypto lender and savings account service, BlockFi, was the first to halt user withdrawals of funds in the wake of FTX’s failure — but it may not be the last.
To many outside observers, all of this looks like insider fraud, clear as day.
SBF lied through his teeth, abusing trust and possibly personally absconding with user funds as the exchange was imploding. However, to SBF, the collapse of his empire might seem to be simply poor luck, a bad coin toss in the game of leverage and misappropriation he was playing in order to do the most good as fast as possible. For a normal person, it takes some serious mental gymnastics to justify his actions, but to SBF they might have simply been the ugly means to a positive end for all humanity.
Again, I am not endorsing this view of SBF as an altruistic person fighting for the most good. All I am trying to show is that this view of him is not incongruent with the crimes he committed and the massive losses taken on by the clients and investors that trusted him and his team.
In fact, this view of SBF tells us much about the wider world of politics, and the risky financial behavior politicians engage in — apparently for the benefit of their constituents.
The Altruistic Politician
SBF may honestly believe living on the razor’s edge of bankruptcy allowed him to maximize his positive impact on the world. Unfortunately, how we fund our governments today shows our politicians follow a similar logic.
While you may believe the vast majority of politicians are nefarious ghouls, out to suck the life blood out of the common man to fund their private jet flights and pet projects, I will assume they have the best of intentions. Perhaps many politicians do believe the regulations they want to pass, taxes they want to alter or projects they want to fund will drive positive change. That is immaterial to my argument.
What I will argue is that due to their reckless funding method, the result of even altruistically-driven spending by politicians will result in a mess indistinguishable from fraud, just as we saw in SBF’s case.
What is this reckless funding method? Excessive government debt.
The State’s Reckless Financing
SBF may have recklessly used customer deposits and lines of credits in order to fund projects he believed would positively impact the world — leading to the swift collapse of his company and a near-total loss of customer funds.
Unfortunately, our governments are doing the same with our savings and wages, on a mind-bogglingly large scale. How?
In government, central planners pick an end they want to achieve — the elimination of poverty, or drug addiction, or high healthcare costs for example — and spend against it. When we pay into that system via taxation, with the money going in equaling or exceeding the money going out, there is no accrual of debt, and therefore no risk of bankruptcy.
However, our governments are currently addicted to debt. Since President Nixon ended the U.S. dollar’s tie to gold in 1971, all currencies around the world suddenly became “fiat” — their value not backed by anything but trust in that government’s ability to pay down its debts.
Since 1971, government debt around the world has ballooned in size. When a government takes on debt, it expands the liabilities side of its balance sheet. This creates risk — an obligation to pay against uncertain revenues in the future.
The debt of global governments as a percent of their GDP. The majority are deeply in debt, with more than a handful over 100%. Source.
Many governments today carry debt burdens exceeding their entire GDP — including the U.S. Even if politicians spent all the money raised by issuing that debt on programs they genuinely thought would help citizens, there is now a huge hole in the balance sheet that needs to be paid back.
To a politician with good intentions, repeatedly taking on debt to pay for ongoing government programs and servicing existing debt might look like simply doing the most good for citizens and the world. Doing what is necessary to tackle the great crises at hand, even when that leads to an accelerating debt burden.
To outside observers, however, this activity should be indistinguishable from fraud.
So why are irresponsible governments still in business?
Governments Are Special
First, governments are just like other businesses in that their debt-fueled spending schemes survive off trust. Creditors must trust that the government will pay down its debts at some point. However, governments have a few extra tools up their sleeves than a normal corporation in order to keep paying down their excessive debts.
First, many governments can simply print money to lower their liabilities. While you and I have to work to pay off our debts, a government’s central bank can simply buy the government’s debt and hand over billions with a few keystrokes. Other schemes like minting a trillion-dollar coin achieve the same ends. All of them take value from all holders of that currency — hurting the lower end of the socioeconomic spectrum which keeps a larger portion of its assets in cash — and give it to the government.
Printing money worked well from the 1980s up until 2021, when inflation in real goods took hold. Prior to 2021, inflation mainly affected asset prices like equities and real estate while driving a wealth gap through the Cantillon effect. Post-2021, consumers are feeling sharp pain from rapidly rising costs of staples — energy and food — and that means the pitchforks are coming out. Many central banks rightly understand their excessive printing and low interest rates led to this outcome, so the ability to print more cash is now limited for the first time in decades.
Without the money printer, how can governments continue to retain the trust of their creditors that they can pay down their debts?
Cue the second tool of governments to pay down their excessive debts: violence and coercion. We’ve given governments a unique monopoly on violence, which they can use to compel their citizens to pay up. Just the threat of fines and jail time is enough to intimidate many into complying with increased taxation or financial controls, like those which may come with a central bank digital currency (CBDC). One only has to look to China to see how a CBDC can be used to micromanage the finances of individuals in the name of the greater good — as defined by the ruling class.
Government use of money printing and violent coercion mean citizens, not politicians, end up footing the bill for the collapse of state finances driven by the reckless debt burdens taken on by politicians. Those politicians may even support the use of violent coercion and money printing to keep the funding going, believing the pain to others to be worth it on the journey to a greater good they’ve defined. Similarly, depositors at FTX will foot most of the bill for the exchange’s reckless use of their funds.
To politicians and SBF, this may feel like honest mistakes and rough patches on the road to helping others as effectively as possible.
To everyone else, it is indistinguishable from fraud.
Are You Begging To Be Crushed?
The entire global financial system looks about as bad as FTX’s books right now, and the only thing that’s keeping it from unwinding is our trust in it. From a citizen’s point of view, we are trusting that our governments will effectively extract value from us to pay for the misadventures and financial risk-taking of politicians.
The solution for citizens is exceedingly simple — withdraw from the monetary and financial system that is designed to crush you. That system can only survive if we, collectively, trust it enough to store our hard-earned money in it. If we withdraw from it in droves, the entire ruse vaporizes — just like FTX.
If you are one of the first ones to withdraw from the existing financial system, you may keep your value intact — just as those who were quick to withdraw from FTX were made whole, before the assets dried up. Those who are too late to withdraw will be left with pennies on the dollar, punished by the taxation, control and money printing governments will need to engage in just to survive.
What does it mean to withdraw in a world where governments can freeze your bank accounts and take your property based on only suspicions of a crime, even in the most developed jurisdictions?
Withdrawing is about distance: How can you put the most distance between your assets and the fraud? I’ll leave it to you to find the form that takes in your situation, as each of us is completely unique. For me, it’s unforgeable digital money that moves at the speed of light, and lives everywhere and nowhere at once: Bitcoin.
Whatever it is for you, I hope you take action sooner rather than later.
This is a guest post by Captain Sidd. 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.
