Crypto
Honor Veterans Day By Adopting Bitcoin And Ending Forever War Funding
This is an opinion editorial by Captain Sidd, a finance writer and explorer of Bitcoin culture.
On the occasion of Veterans Day in the U.S., I wanted to put down a few thoughts on war. War is a vile thing, yet likely millions of people around the world actively engage in it every year with over a quarter of the world’s population currently living in “conflict-affected areas” according to the UN.
America, for its part, is almost constantly engaged in armed conflicts around the world, either in an advisory capacity, with air and missile strikes, or with U.S. troops joining the fight directly. President Obama, who ran on a platform of ending U.S. intervention in Afghanistan and Iraq, was the “first president to serve eight years and preside over American wars during every single day of his tenure,” per NPR. While he did reduce the number of American troops exposed directly to combat zones (from 180,000 to 15,000), he greatly expanded drone capabilities and supposedly-targeted killings, leading to a tenure where, in 2016, every day was marked by three bombs dropped on unsuspecting heads.
Even today, under an administration that slowed drone strikes on suspected terrorists, we now seem to be on the precipice of World War III. One of the world’s largest energy producers — Russia — invaded its neighbor — Ukraine — a breadbasket nation with aspirations to join the NATO military alliance.
Beyond conventional wars, societies today find themselves muddled in endless ideological and abstract wars that also harm people and claim lives — some in numbers far exceeding conventional wars. Several American examples include the War On Poverty, the War On Drugs and the War On Terror.
How did we get to a world of endless wars, and what can we do about it?
To answer that, we need to start with what keeps war going: funding.
War Is Expensive
Putting troops into combat zones, arming them and feeding them is no cheap venture. The U.S. military spent a record $801 billion to keep the machine running in 2021 alone. While military spending is dropping as a percentage of GDP in the U.S., it is still around 4% for the past 20 years.
Ideological wars also rack up immense costs, though these are harder to quantify in some cases. The costs of the War On Poverty launched by President Johnson in 1964 are estimated to total over $22 trillion as of a 2014 study by The Heritage Foundation. Don’t like Heritage’s politics? Consider The Washington Post’s fact check of Paul Ryan’s claim that $15 trillion was spent on the War On Poverty up to 2013. While the article claims Ryan is misleading with the figure, it offers no other concrete figure and can only muster around $1 trillion of possible overestimation.
The costs of the War On Drugs are lower in monetary terms — around $1 trillion — but the second-order effects of unregulated drugs and warring violent gangs create an undoubtedly large burden on healthcare and policing systems. This is not to mention the cost in human lives, with Mexico counting over 300,000 deaths in its country due to the War On Drugs between 2014 and 2020. That’s equal to the amount of Americans lost in the second world war.
The War On Terror gathers shocking numbers as well, with over $8 trillion spent by the U.S. on the post-9/11 military interventions. The misadventures of violent “nation building” in far-flung lands also create economic costs, keeping countries and communities on their knees and unable to grow or prosper.
However, all of these pale in comparison to spending on the 20th century’s total wars. The total wars of the 1930s and ’40s resulted in a massive amount of spending, with World War I costing the United States about 52% of gross national product and World War II running up a bill equaling 40% of GDP.
Where does this money come from?
Funding Sources For War
Governments are only able to engage in lengthy and costly wars through funding — so where does the money come from?
The first funding method is borrowing. Governments can issue “war bonds” that give the buyer a monetary return after the war concludes. In return, the government gets much-needed cash now. In the past, the public was encouraged to buy these bonds as their patriotic duty. Hugh Rockoff of the National Bureau of Economic Research estimates the U.S. raised 58% of the funds used to wage World War I through borrowing from the public.
Liberty Bonds supported the allied war effort in WWI. Source
The second funding method is taxation. Governments can levy taxes to fund war efforts, drawing down from the public’s coffers directly. Rockoff estimates the U.S. effort in WWI received 22% of its funding from taxation. Taxes were raised through the War Revenue Act of 1916, which taxed “profits exceeding an amount determined by the rate of return on capital in a base period — by some 20 to 60 percent,” per the National Bureau Of Economic Research (NBER). Income taxes also rose at top income brackets from 1.5% to over 18%.
The final funding method is money printing. The mechanics of this method vary by country, but usually involves a central bank buying the bonds (debt) of their own country’s treasury using freshly-printed (or keystroked-into-existence) cash. While this only accounted for 20% of WWI funding in the U.S., per NBER, borrowing from our central bank is now an increasingly-popular option for politicians wanting to put cash toward all sorts of pet projects.
Federal Reserve assets grew rapidly over the last 20 years. Source
While borrowing requires counterparties willing to lend, and taxation raises the public ire, printing money is a much more palatable option politically. It allows for spending now without needing to make hard choices or immediate sacrifices. As the U.S. military and foreign influence grew over the 20th century, America’s ability to borrow from its own central bank increased.
The party almost came to an end due to heavy spending on the Vietnam War and the War On Poverty in the 1960s, which led nations like France to trade in their dollars for gold. At the time, the U.S. dollar was backed by gold at a rate of $35 to one ounce of gold. Foreign governments could thus trade their dollars in for gold at any time, and the U.S. government had to honor that rate — however, there were so many quietly-printed dollars in circulation by the late 1960s that the rate should have been around $200 to one ounce of gold.
Nixon decided in 1971 to “temporarily” take the U.S. dollar off the gold standard — though it never returned. Without any hard, unforgeable money backing the U.S. dollar, the government was free to proudly print money, taking purchasing power from all wage-earners and holders of U.S. dollars to support government programs.
With money printing, waging war virtually forever is now possible. Whereas taxation and borrowing dry up when citizens openly defy the war, printing money requires far less oversight or agreement from the people.
Let’s look at a few recent “forever wars” that survived through printed money.
The War On Poverty
The War On Poverty originated in the mid-1960s with legislation creating and expanding federal aid programs aimed at poverty alleviation. These programs include the Job Corps, which helps place disadvantaged youths into jobs, and the Volunteers In Service To America (VISTA), a domestic version of the Peace Corps aimed at helping the poor in America.
The goal of the War On Poverty, as stated in Lyndon B. Johnson’s 1964 State Of The Union Address, was “not only to relieve the symptom of poverty, but to cure it and, above all, to prevent it.” Was the War On Poverty effective toward those ends?
While some of the many federal programs created to address poverty helped individuals in certain times and places, the overall results are not positive. While the U.S. government spent vast and increasing sums on poverty alleviation, the rate of poverty has hovered between 10% and 15% for decades.
Poverty actually declined steadily into the 1964 launch of the War On Poverty, from over 22% in 1959 to around 17% when the Economic Opportunity Act was signed into law in August 1964. This poor performance of the War On Poverty also sits against a backdrop of rising income inequality, where the middle class dropped from 62% of U.S. aggregate income down to 43%, with the upper income bracket taking up that entire drop.
How could this war go on for so long, consuming more and more resources without producing results? The U.S. government printed more money, borrowing from the future and from its own central bank — which began expanding its balance sheet in the 1960s for the first time since WWII concluded. Without the ability to print U.S. dollars, the government’s ability to wage misadventurous wars in poverty and in Vietnam simultaneously would have been severely limited.
The War On Drugs
The War On Drugs began in the 1970s with Richard Nixon declaring drug abuse public enemy number one. In the past 50 years, despite military interventions and strict policing around the world, drug use and abuse is still rampant and causing accelerating deaths.
Drug overdose deaths steadily rose over the past 20 years according to the NIH, and a 2018 poll found that less than 10% of Americans think the War On Drugs is being won. Meanwhile, incarceration for drug offenses is destroying education and employment opportunities, creating an underclass of many disadvantaged and often Black or Hispanic people. Why does the War On Drugs continue, then?
A drug consumption room in Paris, which reduces harm for addicts through clean needles and in some countries — like Switzerland — safe prescription heroin. Source.
Unfortunately, the War On Drugs does not need popular support. The money printer allows funding for the system of policing and prisons needed to continue the war. Without the pain of taxation or the choice to lend to the war effort, the public’s ire never reaches the fever pitch needed to change political tides. The War On Drugs is now unaccountable, a rogue government program with few checks on its spending or actions. What we are left with is an institutionalized destruction of society, kept alive by the money printer.
The War On Terror
The War On Terror began following the September 11 attacks, and put American troops throughout the Middle East to stomp out al-Qaeda and other extremist groups.
While the War On Terror claimed a victory in the death of Osama bin Laden, the evolution of America’s 20-year war claimed an estimated one million lives, with a third of those being civilians. Meanwhile, new terror groups sprung up and evolved during U.S. occupations of Iraq and Afghanistan, leading to the rise of ISIS. At home, the War On Terror served as a convenient excuse to pass sweeping surveillance measures through the Patriot Act.
Perhaps the most poignant example of the War On Terror’s failure was the U.S. exit from Afghanistan. After 20 years of U.S. military occupation, U.S. intelligence estimated the Taliban would take back Kabul in 30 to 90 days after U.S. troops withdrew. It took them just five days.
A million lives lost, $8 trillion spent, and what do we have to show for it? Very little, considering the Middle East is likely less stable and more likely to harbor terrorists today than when the War On Terror began. The war was able to continue, despite a lack of direction or success, due to its unaccountability. There were no clear metrics to measure success and no voters complaining about increased taxation to cover the war’s costs. This is enabled in large part by the massive deficits the U.S. government now runs to wage forever wars.
Why Do We Wage These Wars?
All of these examples of American forever wars were abject failures at achieving their stated aims, yet our government still spends time, energy and money waging them. Why are these clearly-failed wars still funded?
They receive funding because printing money leads to unaccountable programs. Citizens do not sign off on printing money to fund these programs, and they feel no increased taxes or cuts in other areas that affect them. It’s unclear exactly what — if anything — citizens are giving up to fund government programs today. Even when the public voices opposition to a war, that opposition has no teeth.
Voting out politicians who support an unpopular forever war leads to a game of whac-a-mole. There are always more aspiring politicians vying for control over the money printer to fund their own pet projects or forever wars, so the core problem remains unsolved.
Additionally, powerful corporations in the military industrial complex and other recipients of government money have a vested interest in keeping the payments flowing. Those structures have every incentive to keep politicians in power who support using the money printer to pay them, at the expense of the wage earner and middle class.
How does Bitcoin change any of this?
Bitcoin Limits War
Widespread adoption of bitcoin as a monetary unit, in place of fiat currencies like the U.S. dollar, would tightly control or completely eliminate a government’s ability to print money. Just as the gold standard kept U.S. spending largely in check, a bitcoin standard will limit spending on military adventures abroad and costly programs at home. Government programs will need the support of the people to continue receiving funding, or else the increased taxation needed to fund those programs will lead to voting out politicians who support them. The feedback loop of rising spending between government and supported industries — like the arms industry in the U.S. — will largely disappear as public sentiment plays a larger role in allocation of government funds.
I am hopeful we can achieve a bitcoin standard because doing so does not require us to lobby the very politicians who benefit most from the existing monetary system. Achieving a bitcoin standard only requires that we as individuals and communities continue to adopt bitcoin to a greater degree as a savings tool and monetary medium. If we all hold and transact in bitcoin instead of fiat currencies, the fiat money printer has nobody to suck purchasing power from and the politics of money printing will necessarily reform.
Let’s honor our military veterans by only putting soldiers into war when absolutely necessary. Our collective and peaceful actions can end the funding source for unaccountable, brutal and life-destroying forever wars.
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.
