Dr Maxim Orlovsky joins me on the show to walk through RGB, a smart contract layer for Bitcoin. We talk through:

• Some of the history of RGB
• Client side validation as a concept
• RGB ecosystem
• What it can be used for – tokens, bitcoin finance
• MyCitadel wallet
• What’s next for RGB

Links:

• Site: RGB
• Twitter: @dr_orlovsky
• Personal site: Dr. Maxim Orlovsky
• Github: Dr. Maxim Orlovsky

Prior episode:

• SLP439 Federico Tenga – What is RGB for Bitcoin? Iris wallet

Sponsors:

• Pacific Bitcoin Festival (code LIVERA)
• CoinKite.com (code LIVERA)
• Mempool.space
• Base58 

Stephan Livera links:

• Follow me on Twitter @stephanlivera
• Subscribe to the podcast

Podcast Transcripts:   

Stephan Livera 00:02:39   

Maxim, welcome to the show. 

Maxim Orlovsky 00:02:40  

Hello and thank you for inviting. 

Stephan Livera 00:02:42   

Yeah, so I’m hoping to have an episode where listeners can learn a little bit about what RGB is a little bit about the ecosystem now some listeners, regular listeners may have already heard my episode with Federico Tenga from Bitfinex, and he’s working on their particular RGB project. But here we’re going to talk to you and hear a little bit from your perspective. So, do you want to just give us for people who don’t know, you can you give us a little bit of a background on yourself? 

Maxim Orlovsky 00:03:07  

Well, my own background comes from the neuroscience from where I moved into the artificial learning and machine learning and artificial Intelligence, sphere and from that part I went because basically I wasn’t satisfied with the way the modern systems work. Starting from the academia up to the up to the actual economics and country, so I’ve gotten to this censorship. Resistance ideas and from there to cycle bank and from there to Bitcoin. And that’s where I am. If I would put it really briefly. 

Stephan Livera 00:03:46   

Great, so yeah, let’s get into RGB, and so again we’re going to try to keep it basic and explain keep it accessible for everybody. So, at a high level, you know, what is RGB like? Why do we need this thing? 

Maxim Orlovsky 00:03:59  

Yeah, that’s a very good question. Because first, probably we should start with defining what RGB is because it had quite a long evolution and from there its inception in 2015 till today it has changed a lot, so probably I would start with a bit of historical overview why it had started, what it had become and why people need what it have become potentially need. Or maybe that’s if that’s Okay with the. Okay, so the idea of RGB came in 2015-16 and the person who coined the idea was Giacomo Zucco, who is usually very well known in Bitcoin community and the reason why he came with this idea because it was the days of the early Ethereum and ICO starting happening, popping up everywhere and even before you see him, there were a lot of attempts to do that, something more than just Bitcoin and something more than money where you, you remember all this master coin projects and colored coin before. But and Giacomo at least what he is telling as a part of his story, he was frustrated with that. It all blows. Blockchain you it’s all very inefficient and he thought that it’s very improper way of doing tokens on Bitcoin and he stumbled upon the idea of Peter Todd. Who was a friend of him, and Peter talked as one of the earliest Bitcoiners and cryptographers. He was always working on something that makes the way Bitcoin works more efficient and actually from his work earlier work on open time stamps on the idea of time stamping. He developed a more elaborate concept of client-side validation and there was also an idea of single use seals which I will be talking a bit later but I just don’t want to get into technical details yet. But basically, he did an open timestamp. Where it was. Very clear idea. You don’t need to put the information to timestamp into Blockchain you don’t need to create up return and store the whole document there. You just put a hash and this is the hash of the Merkle root of the tree which commits to arbitrary large number of the documents and all these Merkle trees kept outside of blockchain. And when you need to prove something, you provide the document which is not stored on chain. Yes, peer-to-peer you provide the miracle path which is again not stored on chain. It’s just. peer to peer and then you can verify against just a single hash written into the blockchain. So that was the first step with the idea of client-side validation, because this is the case of client-side validation, there are certain data which are kept outside of chain. Completely off change. These are non-financial in any way, so it’s not related to any assets to anything it’s just proofs that something existed and was known prior to a certain point in time and you send this information peer-to-peer outside of Bitcoin and outside of Bitcoin network outside of on chain data and the party that receives it validates it on its own site and you’re not requiring all Bitcoin nodes in all the world to do this validation work for all open. Time stamps because it’s pointless. Like why everybody needs to holiday them so that was the birth of that concept. 

Stephan Livera 00:07:29   

So just, just so I can understand. And just to make sure, we’re going, everyone’s following along. So, the paradigm maybe in earlier years people just thought it would be this idea of everything going on change, which is obviously not going to work right. And so yeah, that will just never scale. 

Maxim Orlovsky 00:07:44  

No downscale list. 

Stephan Livera 00:07:46   

And you know then I think there’s also this idea, this concept of a global state. Machine which? Also kind of doesn’t work right like so I think the paradigm that Bitcoin is are working in is more like each node does its own verification and that’s it. And that’s kind of what we’re getting at. And I think that’s kind of what you’re also getting out with this idea of client-side validation as opposed to trying to put something into a, let’s say, a global computer, let’s say. It’s just not going to be feasible to have the world’s financial transactions done in that way and. You know, using Bitcoin techniques and technology, you’re minimizing what actually has to go on chain per say. That’s kind of a very loose but simplified explanation of what’s happening here right? 

Maxim Orlovsky 00:08:31  

Yeah, exactly. And probably I even extend this story from just history perspective, but I will use the history events to explain certain concepts around RGB such that when we get to the end of the history, we understand what RGB is. So specifically addressing what we just said, you are absolutely right. So, putting the state on chain is it doesn’t scale, it doesn’t make sense and the direction which Ethereum has took will in 2014. So just recently before the build of this client-side validation of RGB ideas. Was exactly what Peter and Giacomo understood is invalid and I had my own saying that if Ethereum is a world computer. It is the world computer with just a single keyboard, meaning that maybe it’s a world computer, but all developers has to use the same keyboard to work with this, not just developers but users. And at the end of the day, that doesn’t scale. Putting the state on chain is just connected. It is the same as connect a single keyboard to their global computer. And that’s the idea. You don’t need the state or change. You don’t need everybody to validate everything. If something is not part of the global consensus and time stamp is example of something that is, that shouldn’t be a part of the global consensus and that’s why. Where the question appears what actually should be the part of the global consensus? Well, everything that is related to preventing double spends or if you talk about more generic smart contracts as we will be talking later when we will come to what RGB has become not just double spend but double commitment to any state, you don’t need to be you have you need to have an ability to provably update a state only once and order the updates of the state in. The sequence it’s the only part where you. Need that global consensus? 

Stephan Livera 00:10:23   

Gotcha Yeah. So just to give an example, if they’re, if somebody wants to make a Stable coin and the Idea is you’re tracking the transfers of that stable coin. You’re trying to make sure that people can’t, you know, double spend the Stable coin. But the idea is that they are using Bitcoins chained to help make sure that it’s not being double spent. And that’s in the sense that, you know it the as you were mentioning, the hash has to be validly a part of that Merkle tree, and if it’s not, then you know something’s wrong. Is that correct? 

Maxim Orlovsky 00:10:55  

Yeah, you’re going in the right direction, but the point in. That just putting in hash. To the blockchain with the open timestamps doesn’t prevent the double spend because you can basically not. Let’s take a very famous example again. It was coined by Giacomo like I’m a medical doctor, let’s say gynecologist or something of that sort, who gives the prediction of a payer? Would they have a baby? Maybe would it be a boy or a girl and I do the ultrasound investigation and I say to them that well, it will be a girl and I’m a chicken doctor. So, I’d like to be good in predicting so. Because for instance, I can’t predict I don’t have ultrasound yet. I live like 100 years before. I say always that it will be a girl and I write in my book that it. Will be a boy. And when a player has a boy, they are happy that I was wrong, usually like toxic masculine assumption, and they’re not. Coming to me and if there was fight or if they come. I said, yeah, I brought the boy. And if I was right and it is a girl again, they are not coming to me. So, I did a double commit. I can I don’t have a provably unique commitment, so the same with the timestamps I can create two Timestamps and two committing to two different documents at the same time, and then reveal just one the one that I like. So this doesn’t work with making a stable. And on the client-side validation. And that’s exactly where RGB was were. So, the first thing that happened is that Peter thought he created this concept of single you seal and the single you seal is an evolvement of. Timestamp to prevent exactly the situation of double spending. So can we modify the timestamping such that we can probably create just a single commitment and that what was received and Giacomo put that Okay, and now with this committee we can make a protocol for like any token and we don’t need to store. Information and the state of the token on chain we use just a single user. The primitive and we keep the token history of change and that’s what RGB had become at the very beginning. So, the name of RGB came even from this concept that we had the colored coins, which is the wrong way of doing the tokens on Bitcoin. Now let’s have Bright way of doing and because it was. Not colored points anymore. Let’s call it RGB like a spectrum of the color. 

Stephan Livera 00:13:24   

Yeah, OK. One other area, I think maybe it’s more of a philosophical question or the purpose question. It’s not a technical one. There might be, and I’m sure there’ll be listeners out there and maybe I even agree with them that they might say we don’t need any tokens, we just need sats. What do? We need other tokens for. 

Maxim Orlovsky 00:13:40  

Yes, yes, that’s what I’m coming to and so it was a token protocol and not everybody was happy with this idea. And I was also not very happy. So, for instance, those days, so they created they need. Concept of this particle it was. In 2017 or 18, they had presented it and it was just the tokens and there were other problems like there could be just a single token because you can’t prevent and client-side validation of multiple tokens being sent to the same UTXO. So basically it didn’t work in these situations, so they. That RGB was the prototype original was working just in the world there where there is just a single token of RGB exist or you need to create. A new output. And I was a friend of Giacomo all those days, and I was looking for the much more programmable programmability in Bitcoin, because I was working on the protocol of machine learning, the point not in decentralized, but in censorship resistant machine learning. So, I had a feeling that soon we will have a huge censorship in terms of training and inferring using neural networks. It was 2018. And that this will stop the progress and centralize the progress and create again huge powers which will leverage that they have just only them have access to artificial intelligence like governments and so on. And we will get much more, more situation pretty much what we are coming these days. But I thought. Well, but in 2018 and I was looking how to leverage that Bitcoin censorship resistance properties in order to get machine learning working and other ship resistance work. And of course, it didn’t scale with blockchain like it was impossible to scale that so on blockchain absolutely. Like No way. And that’s where I have seen that RGB. The idea of this single issues is exactly what need to scale arbitrary complex building in censorship way on top of Bitcoin and arbitrary complex computing. Of course, it can be a smart contract or it can be just a token, but it’s very narrow case because you can go into much larger work. You can have a full computing on top of Bitcoin and it can be scalable because this also work on top of lightning 

Maxim Orlovsky 00:15:56  

You separate the data and validation on the client side from the blockchain, you can put it on top of any Bitcoin transaction, no matter whether it’s mined on chain or it is a part of the Lightning channel. Basically abstract. The way the blockchain and you can work on layer two as well as on layer one and you end at the end of the day, you get a Turing complete computing, censorship resistant, scalable on top of Bitcoin, and that the potential which I saw in RGB in 2018 nineteen. And in. Summer the project has revived because there were certain stagnation the last year because like. The interest to the tokens on Bitcoin has declined. Bitfinex, who actually? One of the very active participants of this project from the very beginning they had an interest of bringing tailor to like eventually because the way how you can scale the transactions. And some other people were also interested in that. They all came together in 2019, and I decided to join the project as a lead developer and together with Giacomo we established an LNP Standards Association because we wanted to put it aside from any business, so there is a Bitfinex. There were several other companies who were interested in that who were providing funding. 

Stephan Livera 00:17:17   

Actually, on this, do you mind just explaining who the ecosystem a little bit because you know there’s different entities, there’s for profit entities and then there’s the non-profit standard entity. So, can you just explain a little bit for people who? Familiar who? Who are the main players? Let’s say in RGB world today. 

Maxim Orlovsky 00:17:32  

Yeah. Well, I will explain how it started and then I will say what had happened. So, the idea in 2019 when the project was revived, we had a number of entities interested commercial entities, primarily Bitfinex tether. There was full ventures which are the venture funds and they warranted. So, the companies they invested in Bitcoin sphere to use RGB, so they also joined this initiative. There was certain interest from Bitrefill those days. There was also another company called InBitcoin . There was my company, which was interested also in building this machine. Learning on RGB. Probably there were some other players. I maybe just, I can’t recall all of them. It was also Federico person ally some and we decided we need to structure that because if we will do the same way like lightning did, having just a commercial entity. Trying with all the conflict of interest trying to do. Protocol layer and then commercial products. We already saw the problems with that approach. We also didn’t want to have something like in non-Bitcoin world in crypto world. So, the decision was to create a non-profit organization which will make sure that the protocol development happens independently. From commercial intern. And let’s you know all the funding that we are getting for the development through this organization and organization was created and time LNPBP Standards Association what is LNPBP is the term meaning that Lightning network protocol Bitcoin product. So, everything we’ve put it in the way that. Everything that doesn’t require software of Bitcoin and can be made on top of Bitcoin as layers on top of Bitcoin. And is part of LNPBP stack and word play was against TCPIP like TCPIP became the standard for the Internet. The LNPBP can become the standard for the new generation of Internet decentralized censorship resistant services, which are made as layers on top of Bitcoin and RGB. It’s clearly that sort of protocol, so that’s kind. Of still the main one of the. Main projects of LNPBP association. There are more than just RGP but and basically I started doing the full-time development of RGB protocols. 

Maxim Orlovsky 00:19:56  

The part of the association, through all these years, there were some companies joining, leaving, so for some period of time we didn’t have any funding and we had to run with our own funds and my company funds. Then there was reappearance. All the interest, and so on and so forth. So, we’ve been through four years of development. And the current ecosystem consists of again with Bitfinex and trader, doing their own project on top of RGB. They do not participate directly. The association anymore since 2021? Probably. And. But they do invest into their own team. There are other companies like Diba who is doing the wallet like my companies. They’re independent developers who are interesting. Which there is frugal ranches. There is another foundation called Hoyo Foundation. They provide funding to that further development. And of course there are many companies which we don’t even know who to build, who are building something on top of RGB. We’ve heard about several of them. And that is what ecosystem looks like today. 

Stephan Livera 00:21:10   

Okay, gotcha so can we just go back to the question around for some users who may not really care about tokens and things like that if you just explain your perspective there, why is it useful? Or are there other aspects of RGB that would be interesting even for somebody who doesn’t give a shout about tokens, let’s say? 

Maxim Orlovsky 00:21:28  

Yeah, exactly. So back in 2019, I didn’t give a about tokens as well. So, for me, RGB was a computing layer on top of Bitcoin. And computing means much more than just tokens, or even then just fine, because with computing you do can do more. For instance, you can have a decentralized naming system like ENS, which doesn’t gain scale. You can have something that does. And unlike DNS, is censorship resistant and there is no token required for that. You can do a better web of trust, again without any token. Having them, you can solve the key relocation problem with the such layer, because now with the web of trust, if you revoke. A key. As your own. You have to use key service infrastructure which is not reliable and again you can like your one party you can present with the information that the key was rewarded. The other party may not know that information, so it’s not provably unique operation. And with RGB you can convert that into a globally signaled event, again without the. Need to store all the data on check. So, I saw a perspective of converting the token protocol which are RGB was into. Well, we can say smart contract system, but even more into a computing layer on top of Bitcoin the it should be that programmability which Bitcoin was like. It should be the programmability that lightning was lacking. So of course, one can use this programmability to issue sheet coins or do some scam. For sure there will be multiple of these things appearing, but again, if somebody can kill with a knife, it doesn’t mean that the knife is a bad thing, so it’s not the protocol. 

Stephan Livera 00:23:13   

Yeah, it’s a neutral tool to be used okay. 

Maxim Orlovsky 00:23:15  

Yeah, it’s a tool. 

Stephan Livera 00:23:16   

And so yeah, and. So that means there are different. I guess part of that is you’re trying to articulate what are the uses of RGB so as you were saying, yeah, for some people, maybe they do care, maybe they care about Stable coins. Now, I don’t personally use Stable coins. I don’t advocate them, etc. but I know there’ll be maybe an audience who are interested in that because maybe they want to build something like that with Stable coin like features. And then maybe there’s other again, NFT’s, again, I don’t care about NFT, but there might be other people who want to do something like that. And then I also see you have some uses on the site around the kind of again, I don’t like the term, but DFI right, like the crypto kind of stuff, but something like that in a Bitcoin way but without let’s say with different with it you know done in a different style. So, could you just explain a little bit what would that look like? You know, just to give us an idea what that is. 

Maxim Orlovsky 00:24:08  

You mean financial? Part of the smart contracts? 

Stephan Livera 00:24:11   

Right. So, for example, I think you’re, I think you’ve referred to this as BUFI Bitcoin finance. 

Maxim Orlovsky 00:24:16  

Yeah, Okay let’s jump into that topic so. The situation here is that I think that you one can’t say that finance are bad always that you just can have a money and no finance, because basically, well, let’s start with what finance is and finance is a sort of contracts between parties on the market that. To provide certain qualities which can’t be provided. Just by my. An example, a very simple example is there is a future contract. For instance, I need a coin this autumn to be able to produce like something that I’m doing out of corn and I need a guarantee that I will be able to buy the corn with the price which is below my the price I can sell. Because otherwise I wouldn’t be able to do a business, so I just do a future contract and that’s a fair finance. It doesn’t involve any talk and it doesn’t involve necessary. It doesn’t involve anything, and if you imagine the hyper Bitcoin nice world, I really doubt that it would be able to work without financial contracts like futures and options or I just do a business I would like to issue a shares. What’s wrong with that? I can do a Bitcoin only business and I would like to have a shareholders. I need to attract investors, so I don’t believe that you can just get with the money, get on with the money and not without the finance. So, that’s the point of Bitcoin finance. So it’s a finance made around Bitcoin and inheriting properties of bitcoins, which I’ve just main two properties that censorship. Resistance, which is needed and the private Bitcoin, while Bitcoin is quite bad at privacy with the client-side validation, the problem of privacy is solved because the information is not stored on. Blockchain you don’t have a transaction graph anymore, so even with that there is a very important use for RGB itself, which I didn’t set. Before, other than just programmability, it’s a privacy layer of Bitcoin because when you operate in RGB, you destroy the chain analysis basically much better than you can do that with the coin joint. And but sorry, let’s talk about that in a moment. But go back to B5 and Bitcoin fire. So the finance we need, we need the finance, and do we need the finance to be censorship resistant? Well, I do believe yes, there is a lot of opponents to that. They say, well, finance is anyway centralized. Yes, of course. Like I don’t think that the problem we are solving is the problem of centralization or decentralization. So, I’m not into this crypto blockchain narrative that what it does is removing man and. Needle that it does. 

Maxim Orlovsky 00:26:59  

That’s the centralization. Well, it doesn’t do anything. So, it’s not true. There is no decentralized real decentralization. There is no real removal of the man in the middle because instead of some organization in the middle, you now have a smart contract in the which nobody can even properly predict how it would behave because. Even the formal analysis or the quote sometimes misses the hacks, so you still have something in the middle which is like, Okay, not a humor, but something else that’ still it doesn’t solve the main problem and there is developers of this contract. They’re taking fee anyway, so it’s still thing in the middle. So, I don’t really the crypto solve that problem and the problem that is needed to be solved is not decentralization but censorship resistance and privacy. So, one can say I can run a SQL database and do the future contracts. They are still database. But you would have a censorship resistance. You wouldn’t have privacy, you would have an attack vector against you. And what RGB provides for the privacy. Why you need to build the financial world on top of Bitcoin and not just outside in SQL database? Is that it provided? Extraction for the censorship resistance and privacy. So, if I issue my shares, I would like to have a secondary market which can operate independently and I don’t want a regulator coming to me and saying you need to bond the shareholders because I must not have ability to do that technical ability. And when I do not have that technical ability then. That is much better system. 

Stephan Livera 00:28:28   

I see, Okay. so yeah, it’s interesting because I’ve heard some of the critiques of this idea of having stocks on the blockchain or, you know, maybe even things like maybe things like Stoker for liquid and things like that of like, oh, what’s the point of having it on a blockchain when the ultimate, you know, it’s if we’re talking about a security as in a share of a company. Why would that even like that’s not decentralized anyway, right? Like obviously it’s a company, you know, but I guess what you’re getting at is to accept that idea that, yeah, it’s not decentralized, but rather The record of transference, like if I earn you know, if you and I are both shareholders of some company or whatever, or if I’m selling some shares to you. You’re saying in this context we could be selling shares to each other of the company and that part is being recorded, or at least being. How would I say this is being facilitated by the system? 

Maxim Orlovsky 00:29:21  

We moved abstracted. 

Stephan Livera 00:29:23   

Yeah, it’s being facilitated by the system, yeah. 

Maxim Orlovsky 00:29:25  

And that’s very important actually. It’s very important. It’s larger than what can be seen on the first glance. Because when we go back to how the modern liberal economy was born, we would recall that in Netherlands and in Great Britain there were company issuing first shares, creating her stocks. There were first exchanges appearing and all of that stuff. First of all, it wasn’t created by government. It was created by free market, so it clear indication that market needs Vista and the second they all had a form of bearer rights, meaning that if you are a shareholder of some company, I have this paper which says that I’m shareholder of that company and that paper is kept. By me, I’m self-custodian of this, not by an exchange and this paper is the way I can prove that and that is very different from how the world works today. Today this is made illegal in most jurisdictions. Is very similar to a Bitcoin to gold being illegal to be held by U.S. citizens back in the day. So, the end of the gold standard. And this right has been withdrawn. Now, if you are a shareholder, the approval of your shareholder. Is the Ledger. And the entry of the Ledger, which is kept by the exchange or some Central party or even the company itself. And that’s a huge difference, especially in terms of the privacy, because today, for instance, BBI, one of those jurisdictions where you may have barrier right shareholding. So, if you have a company on BBI. You have the certificate which you put into the dial cell or into a safe at home. And nobody in the world would. Know that you are. Shareholder there is no way for regulators to come into the office of BI Company and ask the list of shareholders because there is none like you don’t know who have the certificate because I can go to. Do and sell it directly, and nobody in the world would know. And once you get into the leisure world today world and I think that’s why blockchain is really bad, because blockchain is the Ledger and the Ledger is the centralization of information. So, any blockchain is not about decentralization but about centralization. 

Stephan Livera 00:31:44   

And so yeah, I was just thinking, is there a case where transparency would be opted into though, as an example? So, like would you say, would you have companies where they want the shareholders names to be public for whatever reason or maybe it’s some corporate governance thing? 

Maxim Orlovsky 00:31:59  

Then shareholders can publish their names. Like you can’t make, you can’t enforce privacy. The only thing you can enforce is the absence of privacy, but you can’t enforce privacy because if the person reveals his identity, if the shareholder reveals his shareholding, there is nothing in the world how you can stop. Him from doing that? 

Stephan Livera 00:32:19    

I see and it would be in this case provable that they are an owner. It’s like they’re not just lying. They’re not just saying oh. I own 10% of this company. No, it’s like actually you can. Verify it, yeah. 

Maxim Orlovsky 00:32:29  

Yes, so this barrier rights instrument is a huge privacy deal. It’s not only privacy deal, it’s also censorship resistance deal because they always go in parallel. Because today, if I’m a shareholder, but I can’t access the Stock Exchange, my shareholding nothing, because I can’t sell my shares. Years, and that is where the censorship comes into place. And when we move back to the barrier, right, I can do that, OTC. But today. With the existing shares, I can’t do that OTC and the same applies to futures to options to many other things. So, I think that financial work today is broken in that regard. It completely centralized  and so. And it has the same problem as monetary world. And if Bitcoin solved the problem of money, it has the same potential of solving the problem of finance centralization, censorship, and privacy, and absence of the privacy. So that’s where RGB started in terms of finance. So, if we are talking about finance application of RGB, there’s Bitcoin. Finance RGB is a barrier right instrument for finance and in RGB you keep your proofs of the ownership on the client side you just replace the piece of paper with the digital thing and that’s it. And unlike with the paper thing you can of course verify you can check the signature. But I can counterfeit and I create two different certificates and share sell them to two different people, so I can double spend. But with RGB I can’t because I am using this single use silk primitive which probably creates A singular spending committing to down to the Bitcoin try. 

Stephan Livera 00:34:11   

I see, yeah. 

Maxim Orlovsky 00:34:12  

And that’s, that’s where we actually the revolution happens. So that’s why I say that RGB can revolutionize the way the financial industry work today, bringing privacy and censorship resistance to. 

Stephan Livera 00:34:15   

Okay, so yeah, so we’ve spoken a little bit about the ecosystem. What are some of the potential uses as we mentioned, things like it could be tokens which could be stable coin. So, others it could be art thing, NFT things which again, I’m not interested in, but maybe there’s some financial application where maybe in the future there would be applications there for recording of shares, things like this. So, we spoke a little bit about those elements. Let’s talk a little bit about the technical aspects of it. So, do. You want to just explain a little bit more. From a technical perspective, now I understand today it’s like most of the RGB stuff is on train, but the idea is. To sort of move it. So, could you just explain a little bit more about the technical’s of how to achieve some of these ideas and maybe explain a little bit about the single use seal as well? 

Maxim Orlovsky 00:35:10  

Yes, well their concept is very simple and at the same time it’s very. Hard to explain like it’s even. I was into it and it took more than a year probably for me to understand how all the details work. So I will try my best. The concept is simple because there is a fundamental property we are all aware about. Bitcoin, which is if I have a Bitcoin UTXO I can spend it only once. Well, I can do. I can double spend. But at the end of the day, only one spending will be finalized. So once I if I count the blocks once, it gets buried into certain amount of blocks. Then I can. Probably present information of the probability that this is. Final and of course, in the history of blockchain, I can’t double spend UTXO in the mind blocks because like it will be invalid blockchain bound. So that’s clear. If I have Bitcoin analytics so I can spend it on the once. So, can I extend this property outside or blockchain? Can I extend this property out of Bitcoin as a coin from this UTXO? Well, I think I can let let’s do it right now. We can do a simple version of RGB product called. And words, we don’t need anything because this protocol is purely logical. So, the way how we implement it, are we writing on the paper or in the messenger or in some? Specific form of binary data, its implementation detail. What is important is the logic. So, let’s do a simple RGB or single user based protocol. I can tell to you that my name is Maxim, but it could be that in the future I would like to change my name and it will be my decision. Only you agree with that, right? And when I change my name, this is a singular event. So it shouldn’t be that if I change my name to let’s say Alex, I tell that to you and I some other, some other people, I will tell that my name is Bob for it. It’s like it doesn’t work like that. We would like to make this name change just a singular event and that it said it happened. Nor it haven’t happened. And when it happens, you can. Always say what is the name? So, we agree that when I change my name, this is UTXO I do control again. I can take some UTXO I can prove that I control this UTXO. So by signing the with the key or with that address so you’ll know that I do control the Switcher. So, and I’m saying that when I change my name. I will spend this UTXO and inside the transaction which will be spending this UTXO, takes so this will be a singular transaction in the first output I will put a commitment to my new name. 

Stephan Livera 00:37:50   

Gotcha, Okay. 

Maxim Orlovsky 00:37:50  

How many times can I Change my name. 

Stephan Livera 00:37:52   

Well, after you’ve spent that output, it’s as we said, you’re relying on the Bitcoin aspect that it’s once it’s already been spent. It’s each UTXO is destroyed and you once created. 

Maxim Orlovsky 00:38:02  

Then they put two commitments. There is just a single transaction inside that single transaction. Spending that UTXO there is a very well defined single place where commitment can be present. So, basically when I change my name, you will always know even if you are not talking to each other because you can track this. You click on chain. When you say oh it gets spent now if I didn’t send that to anybody else and it’s just me and you, nobody in the world even would know that something happened related to this UX. Suspend chain analysis would think I moved several sets, but the reality that I changed my name and no chain analysis would know that, that is what client side validation. And when you see this event, you can ask me and I can provide you the new name and you can verify that this new name is the hash of this name is exactly hash present in the spending transaction. 

Stephan Livera 00:38:53   

Yeah, I see. Okay so, think we can think of it like my client is watching the chain because you told me this is the one. This is the commit the TX I committed to and my client is watching the chain and then realises, oh, there’s been a movement there. Okay, Maxim changed his name. 

Maxim Orlovsky 00:41:02  

Yes, yes, and nobody else would know that. And the funny part is that I can put a commitment into Bitcoin blockchain even without any consumption or block size or block space. 

Stephan Livera 00:41:13   

So how does that works?  

Maxim Orlovsky 00:41:15  

Well, there is actually multiple ways It’s like there were ways which were existed before. Like way to contract or side to contract. So basically you tweak a public key in the output or the signature in the first input, and you basically put a commitment there. But we have created a more elaborated way. Which we put, which we call taproot operation commitment, or TAP red for simple. So basically you use the same operator, but instead putting it into the UTXO. You add that to the top three. So, basically you have a taproot output with the same 34 bytes in the output, which is basically a 32 byte key. But this key inside is tweaked with the commitment. Which is put inside the top of the tree in a certain position. So basically that’s why, for instance transcriptions and all other related stuff is so retarded because like there is much more efficient way of doing what they are doing and without any need to use witness data at all. Like it’s like kind of they went out of Stone Age without knowing. Anything about technology and computer science and created some crap. 

Stephan Livera 00:42:28   

Well, yeah. Okay so, I think for so bringing back to I guess RGB and tokens and things like this, the idea is the person who’s creating the asset. You’re the one. Could you walk through a little bit about that asset creation and transfer process because I guess it’s related to what we were just saying, yeah. 

Maxim Orlovsky  00:42:46  

Yeah, it’s the same like with the name so I’m an issuer to issue an asset I don’t need to do any on chain operation. The only thing I need to do is to write some digital documents saying that I issued this asset and I put this asset, we call it. I allocate this asset to this UTXO or a number of UTXO, so this UTXO holds that’s amount of it’s inverted, so holds that amount of mass that it takes or holds that amount of mass. That’s it. That the whole of the issue I can write it on paper doesn’t matter. And then those who help those UTXO need to know about that. For instance, it’s my UTXO, so I issue, I said to myself, it’s the. Simplest way then. When I want to send the spend that UTXO I’m talking to you. So, let’s say you would, do you like to accept my Shitcoin and for some reason you want like yes. Yes, I really like your Shitcoin. Please give me some. Okay here is UTXO where I have my Shitcoin. This is the paper saying that I issued to those UTXO. Yes, Do you do you agree with that? So, I’m sending you this information. You check this information, you see that everything correct? So, I have my Shitcoin which I just issued and for some reason you need it and you say yes, I’m quite happy with the issue so I’m sending this UTXO and in the transaction spending this UTXO, which is the single transaction, I put a commitment to another document in this document called state transition, and that document says that I take out of million of the assets I issued reference to the issuance document. I sent hundred of this Shitcoin to a UTXO which you provided me with the UTXO that you control and the chain goes change goes back to some other UTXO. So, that is a state transition which is unrelated to a blockchain. It’s a separate digital document and I cash it and I put cash into the transaction that spends that he takes on. 

Stephan Livera 00:44:40   

Okay. So just to walk me through this part does this mean currently every state transition has to hit Bitcoins blockchain. 

Maxim Orlovsky 00:44:48  

Now it has to hit Bitcoin transaction, but it can exist inside the Lightning channel.  

Stephan Livera 00:44:51 

Okay so it doesn’t have to hit the chain. You can keep it off chain, Okay. 

Maxim Orlovsky 00:44:56  

Yes, It’s only it you who decide what qualities of this transaction should be. So, if you have an open lightning channel and you know the state of the channel, it can be a Lightning Channel transaction. If we are in the arc world where like we have CCTV software or. Something it could be a transaction which is not a part of the channel and just CTV somehow commits to something but. You it should be a final transaction. You should to know. That like eventually you can always fail back to blockchain. 

Stephan Livera 00:45:28   

Yeah, Okay. But I’m curious then like as an example, I’m just thinking, let’s say I have a lightning channel, some unrelated lightning channel, and I give that UTXO to you because I want you to issue me this coin or let’s say it’s a share in the company, even it’s like not necessarily even a Shitcoin, it might be equity or whatever. But then that Channel force closes. Like let’s say the other guy force closes my channel. Do I lose? My asset or how does that work now? 

Maxim Orlovsky 00:45:49  

In that specific case, you wouldn’t because the guy who force closes your channel, he doesn’t. He’s not able to spend your UTXO without your signature, so you take some hits on chain and it just don’t spend so everything is fine. It is just you who should not forget to properly spend your UTXO not to lose the state which is attached to it. 

Stephan Livera 00:46:10   

I see. Okay, because yeah, because I was. I was under an impression then that, you know, if I have a lightning channel with somebody, it’s a two of two multi signature and then there might be an anchor output. But fundamentally that output might you know, move so. 

Maxim Orlovsky 00:46:24  

But it might not move without your signature. 

Stephan Livera 00:46:27   

I see, but I would have pre signed that right? Like I might have pre signed that transaction for the other guy, I guess, yeah. 

Maxim Orlovsky 00:46:32  

We spent well, if you have spending for your output you it’s better you for you not to reuse it because basically you already have a transaction spending this output, so it’s not unspent output. 

Stephan Livera 00:46:43   

Yeah, but anyway, maybe it’s not the best example, to be honest. Because maybe I would rather keep. I wouldn’t be using maybe I would keep all my assets on a different UXTO like in this example that I wouldn’t keep it on something that’s kind of in flux let’s say. Okay so, I guess I can kind of get that part of it. and then so could you explain a little bit around RGB lightning because as I’m understanding it is almost like a it’s not the same as lightning today like as you know, like L&D and you know core lightning and yeah. 

Maxim Orlovsky 00:47:12  

Well, it is. It’s just that the Lightning node should be aware of RGB to properly manage it. So the protocol, the Lightning Protocol itself, doesn’t require any changes. What required changes is the software. Because like Bitcoin, transactions are still the same in just the software that need to take the RGB state into account when creating output, because it needs to put the commitment into that output. So in this way basically RGB protocol wise RGB is abstracted. So, it can work on term on top of. Lightning on top of Park, maybe tomorrow we would have like super arc. It will work on everything that is Bitcoin transaction as long as it is a consensus accepted Bitcoin transaction. But of course protocol wise. But software of course need to be aware about RGB and use this data, so you can’t use RGB with the LMG. For instance today. And you need to have an lightning node that is aware of our of RGB. Today we have two to prototype things. The first one is L and Pinot. Which was done. By this island PDP Standards Association and it’s deliberately designed to work not with just lightning but also with RGB. And the second one was done by the Phoenix team for Federico, who we was talking to. They took the LTK and they took the LTK note, which was recently released. And they added RGB support to their own work. So we have at least 2 implementation. Just today, we plan to work on we did a preliminary investigation with sea lightning and with Christian Decker and we see that it is possible to add RGB to see lightning with plug-in infrastructure. The slight modifications which are needed to the plug in APIs and lighting but they are like. Very tiny and they can be merged into the main, so we may have an RGB plug in for some lightning. Well, and that and gives us 1 mobile note actually 2 mobiles. Note one, just not yet widely used which is LP, but another LTK which is used in mobile apps see lightning and that’s already quite a lot. And the interesting part is that you can you just need two parties to like if you have a channel and we would like to. That RGBS, that suggests me and you who? Needs to install the RGB wire lightning, but not the rest of the network, so. 

Stephan Livera 00:49:41   

Okay, so it’s more like the RGB participants need to run RGB aware software, let’s put it that way that they might not need to run the default version of a particular light node. They might need to run the RGB fork of that, and then they now they can, let’s say colloquially, speak RGB to each other. When they are issuing assets or transferring assets, and in doing so in a lightning context or let’s say an off-chain context, those transactions don’t have to hit the chain. So that’s really good from a scalability and perhaps privacy perspective, right? Yeah. Okay and so let’s talk a little bit about V 0.1 I know that just came out recently in terms of the, is it the RGB spec and you mentioned I was I was reading it mentions the global state in RGB contracts. So, I’m curious how you would? Doing that. 

Maxim Orlovsky 00:50:36  

Right. Yeah, small node. It’s 0.10. So, it looks like one, zero. so yeah so it’s 10th iteration. 

Stephan Livera 00:50:39   

Oh sorry 0.10, sorry about that. 

Maxim Orlovsky 00:50:43  

No, the first of the protocol and we think that’s it’s the final finalization of consensus layer, meaning that assets issued with this version would remain valid or in the future. So, unless at least there, there is no vulnerabilities discovered, so we are finally we’re able to shape the RGB into the smart contract. Listen, we would like to have and the one part of the story was a difficult story with the global state. So, if you try to create a computing layer or smart contracts with this paradigm which I described to you, the client side will validation and single you seal. You see that? What about the state that is not owned by some party. What you can do with that? Like how you can manage it and. That’s what is global state. Global state is something that is not owned by a well-defined part and how it works. Well, it works quite simply because in these documents or the state transitions you can. Specify some data which are not owned by anybody and the fact that kind of they’re not owned doesn’t mean that they can’t be changed. Yeah, because the, thing here is that if you change them, you change them from your part of the story down to those who inherit. Your part of the story. But not for other participants who are not integrate interactive. So basically you have a distributed system where you’re able to update something that is not owned by anybody and everybody who will be after you in this smart contract, they will know that because they will receive this as a part of the history data. 

Stephan Livera 00:52:23   

Okay, I see. 

Maxim Orlovsky 00:52:24  

If you want that other parties, somebody else, unrelated to the protocol, to know this data, you just can’t publish them in any data network. What is data network? Well, it can be anything. You can use Nostril you can use Torrent you can use IPFS. You can use lightning. You can use many different mediums, so the RGB is abstracted from specific data networks which are used for sending this client-side validated data to each other. So, with this global state you can think you can have different stuff which can be useful in some Bitcoin finance scale. 

Stephan Livera 00:53:01   

Gotcha. Okay great, and so in terms of RGB Lightning, can that be used to just transfer SATS today or is it more like they’re just, you know, people are just using the Lightning network like today that’s not RGB aware, does that make sense or not? 

Maxim Orlovsky 00:53:18  

Well, yeah, well you can transfer to sites without RGB today with the Lightning network, so you probably need some reason. To do the sets, transfer one of the reasons mode could be that you would like to add more programmability to sets to a more complex conditions, and that’s where you would need to put these sets into RGB, and then you will be able to transfer them in more elaborate way. Using the Lightning network. 

Stephan Livera 00:53:43   

I see. So, it’s more like maybe a person wants access to this RGB ecosystem and. Because of that, they will run an RGB lightning node or client and then off of that. Now they’re sending Sats around because they want to use it to issue tokens and do different operations in that ecosystem. Okay, got it. We. Should also chat a little bit about I know you’re also involved or I think you’re perhaps you’re leading A-Team doing this? My citadel wallet. Do you want to just talk a little bit about that. 

Maxim Orlovsky 00:54:12  

Well, it’s a wallet which we started doing as not as a start, not as nonprofit, but my company as a for profit company, but it’s free open-source wallet. And the reason for that wallet was basically we need some wallet working with RGB, so we need something that is able to work with RGB. Eventually, it has moved farther than that. So basically because we need to do this very, very cheeky thing of top return. And to Pret commitments we needed. So, you just can’t take any wallet that can work with that, so. We had to. Modify the wallet normal Bitcoin Wallet library itself. So, we have developed our own Bitcoin Wallet Library which is called Descriptor Wallet and which is more generic in what it can do. Comparing to BDK and other Bitcoin library and then we used it to build the wallet and basically it happened that this might sit at the wallet additionally to the support of RGB has a clear quiet support for valid descriptors or put descriptors for manuscript. So, you basically you can use multiple, though today without RGB and do quite interesting stuff like you. Can have a. Time locked. Degrading time locked output. So, for instance, you have these conditions of. Two of three can spend anytime signatures or one of three can spend in two years from now and you can construct that in the user interface that’s with the desktop version of My Citadel, and we have some companies starting using it for the real Bitcoin operations without RGB, and that was like an unexpected how you call site? 

Stephan Livera 00:55:56   

Interesting to see, though. Yeah, that is out there. And even people who don’t want RGB, that could be a useful feature for them maybe. Depending what they want to do in terms of their complicated multi signature set up to have more advanced things there. Yeah, that’s interesting to see. 

Maxim Orlovsky 00:56:10  

Yeah, and it was one of the first world that’s probably the first world who was supporting taproot and taproot script was spending. And one of the ideas that with that wallet you the wallet is fully abstracted from private keys it doesn’t ever touch it. It creates A PSBT’s which can be signed with the hardware wallets or any other signer which can work with a PSBT. Even if you would like to have some hot key, but you still need to go outside of the wallet and use some specific signal. So that’s quite. 

Stephan Livera 00:56:42   

I see. So it’s like key agnostic let’s say and you can save a PST file, load that into the other wallet, sign it and then bring it back to. Yeah, Okay. Like just like offline signing with, let’s say, Spectre or Sparrow or similar wallets out there or electrum? Okay yeah, that’s cool. So yeah, I guess we’ve done a little bit of an overview there. I guess one critique of the RGB thing I’ve heard is the ephemeral nature of it, right? And I guess it’s a benefit and it maybe it kind of be a downside in other ways that maybe that now means the user one has to make sure he keeps the information and maybe in some sense it makes collaboration and scaling a little more difficult. I’m curious your thoughts on that. 

Maxim Orlovsky 00:57:24  

Yeah, that’s all true. Overall, I would say that it’s still nothing new for Bitcoin world, because in Bitcoin today, you need to keep the private key if you lose private key, you lose your Bitcoin and you need to keep now a wallet descriptor. 

Stephan Livera 00:57:35   

Of course. 

Maxim Orlovsky 00:57:39  

Well, for trivial wallets, you can recall it, but still, you need to remember. But if you have. And complex setups multi seats. With the time locks, you need to keep the descriptor. If you lose it, it will be really hard. To recover the funds. So or RGB in RGB now you would need to keep also a client-side data, just another piece of data to keep so that the infrastructure is already there, unlike private key. If you lose private key, you’re just not losing access to your bitcoins but. Also, somebody can stall them if you lose RGB client-side data, nobody can steal, steal your assets. You just can’t spend them. So it’s less critical than private, but still quite critical. The second thing is interactivity. Again, you have a Lightning network today which requires you to be always online energy. You don’t have that requirement, but you have a different requirement. Because you need. Some relay to be online or you need if. You are not using relay. The party who sends your funds. Needs to be constantly online, so later when you get online you can grab the. 

Stephan Livera 00:58:43   

At the latest state. 

Maxim Orlovsky 00:58:44  

Data from the. Right. Yeah, yeah, but you can reduce existing other networks. One of the projects we are working on is to use most relays to do that stuff, and that was one of the reasons why we abstracted the data layer from RGB because we don’t want to compete in the data layer like there are multiple protocols and the free market should decide which one is better to use and I think that is still much better than enlightening where you have very strict connection. Much higher interactivity requirements and very strict connections on the data propagation which must be lighting itself. Again, if you’re using RGB global lighting, it’s nothing because. You already have. The interactivity requirement by lighting itself, so RGB doesn’t. It’s a lot of problems, so yes, there are some tradeoffs, but they are normal to Bitcoin protocols I would say. 

Stephan Livera 00:59:40   

Yeah, Okay. So, where to from here? What are? What are some of the things you’re looking to see come out of RGB, whether that’s, you know, your specific company or the ecosystem for RGB? 

Maxim Orlovsky 00:59:52  

Well there is quite a lot of which may happen next. First of all, of course we are looking for projects starting using RGB for real. We are still, I think sometime from it. So even we like the, the first thing I need to explain and there is a lot of misunderstanding about that people are asking is RGB in Mainnet. Or in Testnet that’s the problem that RGB is not in that. RGB is not in network, so it’s like the same is asking. I don’t know. Is my car on Mainnet or on Testnet? Well, my car on the road which I put it on like it’s not something that needs to connect. If I drive outside of my private space. It’s on the Mainnet. If I drawing, it’s only around my house. It’s just that. So, the same with RGB. There is no network. It’s not connecting to the there’s no. There is thing we call RGB node but it’s not node, so we probably made a improper decision to make to name it node because it doesn’t connect to other peers in just a application that does something in the background. So energy. But there is no network and you issue asset when you issue the asset you issue. The specific network Bitcoin Mainnet and Testnet it it’s you as an issuer who makes this decision and basically at the moment when you issue RGB on Mainnet it is on the mainnet Each smart contract in RGB is isolated from other smart contracts, meaning that it’s. You can think about the smart contract in RGBS, Shard blockchain in its own. It’s not a blockchain. But like it’s an example, so there is no single thing and there are even some assets which were issued on mainnet and but we recommend to continue doing on test net unless there is some. Significant economical activity already happened on RGB, proving that the system is secure. Because like we have just coverage we, but we still don’t have formal audits or audits and that’s what we are looking for the next month and we have several companies who are willing to do these audits because basically a nonprofit we have very tight funding. We don’t have sufficient. Once you want to do the audit of the system, so if somebody wants to use RGB on Mainnet, it is their responsibility to make sure. That they are happy with the security level of RG. It’s an open-source project and technology, so this is the first thing we are looking into is the audit and getting building the adoption and real assets and real smart contracts being issued on RGB. We have the plans for doing some assets. By ourselves, but probably that’s not maybe discuss it next time because I don’t want to spend too much time on that direct. 

Stephan Livera 01:02:36   

Yeah, sure, sure. 

Maxim Orlovsky 01:02:39  

The second thing we are looking into is very, very, very interesting and that’s a huge thing. And like, let’s start with the vision like you asked about what, why RGB is needed. I think that at the end of the day, there will be no Bitcoin blockchain because it’s a kind of. And I think we share with. Giacomo and several other people, we believe that Bitcoin is great. Bitcoin blockchain is the Bitcoin problem, like it’s the source of all bad things about Bitcoin, non-scalable, non-private chain analysis, everything they, they, they all these problems are coming from blockchain. Then the question is. But well, What if not blockchain, how you can? Do Bitcoin well. The answer was you can’t. That’s why you have Bitcoin blockchain. So even it is bad, there is no other way of making something like Bitcoin without the. To college, however, client side. Validation changes that much, so if you can. Do that with. The client-side validation, is there anything you can do to blockchain to shrink it as much as possible to remove the all the state out even heating saucer and still maintain some sort of single you still primitive and we’ve been looking into this direction for three years already. And finally, we have some concrete results, which is we sent to the Bitcoin mail list several months ago, a proposal called prime, and that’s a concept. Of layer one for client-side validation and this layer one is scalable and it is able. To like you would have a fixed size of the block which is like several bytes or several kilobytes only. Committing complete containing all these client-side validated data commitments. To very large number of transactions which can be millions of billions of transactions, and it does this single you seal with the data. And when you put the RGB on top of such prime thing, you basically get scalability, privacy and everything. So, the only thing that is missed is Bitcoin, because this prime layer, it doesn’t have any token, any state, nothing basically. So, if you can move Bitcoin from Bitcoin blockchain into RGB, then you can transplant it on top of the prime. And there is no more Bitcoin blockchain, but there is a Bitcoin, and this Bitcoin inherits the Bitcoin you to exercise and. The ownership from blockchain. So, the this is. 

Stephan Livera 01:05:06   

Is it kind of like a side chain? 

Maxim Orlovsky 01:05:08 

No, not in the cold. 

Stephan Livera 01:05:10   

Because you know, there’s no pick back then. 

Maxim Orlovsky 01:05:12  

Yes, there is no but well, you can. As a launch, you can use Bitcoin mining to secure, and again you don’t need drive chain for that. You can do that with the single use seals. Basically you can connect other chain if you’d like to inherit the security, not the assets, not to move Bitcoin. But if you would like to inherit the security of Bitcoin. Blockchain you don’t need merge mining, you just do the single use. To construct and, you can piggyback to the security of other chain, but it’s not right chain because you are not moving Bitcoin to prime, you are moving Bitcoin to RGB well basically by you can say by burning Bitcoins on Bitcoin blockchain and issuing them on RGB. Or there could be other methods like you can. Log them to two of two Multisig with the same federation, but again there is no trustless way to get out, so once you move Bitcoin to RGB, you can move Bitcoin to RGB trustlessly, but you can’t get out of RGB trustlessly There will always be some sort of assumption, and that’s a pity thing because. It creates a quite a large threshold. We understand that, but this is not just problem of RGB, it’s basically problem of moving Bitcoin to anywhere. So, with the current Bitcoin consensus, it is not possible. But anyway, so we have this idea of further extending the client side validation and making Bitcoin. More probable, more scalable. At least it will be possible with a prime for all assets or all contracts except Bitcoin itself, and then eventually Bitcoin will get soft work one or some other. We don’t have any preferences in this regard. There will be a way to move Bitcoin. As well, the third thing we are looking. Into is the. Zero knowledge. So, we are looking into compressing this client-side history. With the zero knowledge proofs and making contracts interacting with each other also through the zero knowledge proofs. So that’s quite an important advancement which we will be working next years. And the final thing we are of course we’ll be investing a lot into the tool chain around RGB, creating like starting from integration. To lightning nodes up to providing more high-level ways to write a complex smart contract like we are working. Today, well, today you can write the smart contracts with rust or even YAML or JSON, but you can’t use a Turing complete verification some if you need something. And see for that you have assembly language which is very low level, and we are working on more high-level language which is called contracting which is functional and we’ll be able to with that language you will be able to create complex smart contracts like crypto collateral based stable coins or liquidity pools and many other things so, these are the directions. We are looking into. 

Stephan Livera 01:08:01   

The prime one seems a little concerning to me though, like if the idea is that. Trying to move Bitcoin off of Bitcoin per say? Then who’s gonna? Are you presuming then that they’d still be enough kind of on chain users of Bitcoin that retain the that system? I mean, it doesn’t like at that point. Are you still using Bitcoin? It’s kind of a bit confusing to me. Do you have any further explanation on that or? 

Maxim Orlovsky 01:08:24  

The prime is not about moving Bitcoin. The prime is how you can do something scalable, censorship resistant. A private without doing a blockchain. So, the prime with RGB can work with all the but. Okay 

Stephan Livera 01:08:36   

Okay, so you’re saying it’s more like a other tokens or other functionality in a way? 

Maxim Orlovsky 01:08:42  

Well, there is no other token there. There is no idea of doing other token. I’m just saying that technologically it’s a technology non blockchain technology using client-side validation to build the system. And but if you like to use it, you can use it to move Bitcoin to it. And it’s not like you need to some pork for everybody to agree. Now it’s a decision on which Bitcoin owner, so if you’d like to move your bitcoins, you have this option of moving bitcoins there if you don’t. You don’t move. Like there is nothing forcing you. There is no miners who decide there’s nobody. That’s just a. Way how you can if you need to have more private Bitcoin. If you need to have more programmable Bitcoin. If you want to have a scalability without lightning network or arc you can use this technology and move your Bitcoin there. If you think that there is higher risks because like it’s a new technology and maybe these bitcoins. Could be stolen due to some bugs. Well, don’t move. That’s very simple. 

Stephan Livera 01:09:44   

Gotcha, Yeah. Okay Yeah, well, interesting to chat and it’ll be, yeah. I guess interesting to see where things go with the smart contracting aspects of it. I guess one other area just before we finish up, if you could explain a little bit. You mentioned around futures and options and things like this. Could you just explain a little bit how that would work in an RGB context because maybe they’re? You know, imagine in the future in the Bitcoin financial system, maybe there are people who want this kind of thing. Could you just explain how RGB would do these things, like a futures or this kind of things? 

Maxim Orlovsky 01:10:17  

Well, it pretty much depends on which type of feature you would like to have, but basic idea is that you lock certain amount of assets or bitcoins to a condition which is Turing complete condition. Well first of All you can do futures even with. Bitcoin today using DLCS, but if you use DLCS for building the futures. Right. You don’t have a second asset, so you can’t have a future without the second asset, even if it is attacking is good like I would like to buy some. I don’t know. Tissues or oil tomorrow, but you need to put it into digital world, so you need to tokenize and that tokenized real-world good is an asset in terms of live TV. So today with the Bitcoin. You can do the LC, but what would be like on one side you have Bitcoin? Do you have? On the. Other side. Like colored coin master coin. Well, no. So, with RGB, RGB brings an acid, so you just take the acid in RGB. You take the DLC and you do the future, so that’s the very simple thing. If you don’t want to do something more fancy without, you’ll see because you’ll see itself is quite complex thing. You can bring 2 assets into RGB and write the two in complete conditions about when the asset can be spent. So that’s the two ways of doing that with RBG. 

Stephan Livera 01:11:38   

I see, Okay so yeah, thanks for joining me today and explaining a little bit about that. Can you just give people explain where they can come and find you online if they want to find out more about you? 

Maxim Orlovsky 01:11:51  

Yeah, sure. Well, first of all, there is a site called RGB Tech where they can explore more about RGB and it contains the lists. Of codes. Source code repository. Standard specifications, installation instructions. So it’s a good entry point. It’s officially maintained site officially maintained by the. Association there is also the GitHub and the site of lnp-bp.org which is site of association where you can find more about other projects related to Lightning Network and Bitcoin. Client descriptor wallet and if somebody looking for to find myself well it’s much harder and trying to hide from people to do some work sometimes but you can go on in a GitHub dr-orlovsky or on Twitter it’s probably the last two. Places where are still present. Twitter is also @dr_orlovsky so that’s it. 

Stephan Livera 01:12:52   

Great, Okay. Well, thank you for joining me and chat again sometime soon. 

Maxim Orlovsky 01:12:59  

Yes, thank you. 

Stephan Livera 01:13:01   

Show notes are available at stephanlivera.com/501 for this episode. Thanks, and I’ll see you in the Citadels.