While Bitcoin may always be the high profile forefront of the cryptocurrency revolution, the technology behind it may be falling behind. Newer technologies like Ethereum have built-in smart contracts — executable code that allows the blockchain to perform all kinds of functions outside of just transacting money or value. Entire ecosystems and projects can be built on top of Ethereum. Bitcoin, on the other hand, has been left out of the smart contract revolution. Until now, that is.
RSK and the Bitcoin Smart Contracts Revolution
RSK, or Rootstock, is a second layer solution that adds powerful smart contract technology onto Bitcoin without directly changing the Bitcoin network itself. It doesn’t require dedicated miners, instead, Bitcoin miners can choose to dual-mine BTC and RSK with very little BTC mining efficiency loss. Its innovative smart contract and smart Bitcoin (SBTC) solution could potentially change the way that we interact with Bitcoin from now on.
Smart Bitcoins, or SBTC, are essentially a representative currency with a 1 to 1 value with BTC. An SBTC comes into existence when a corresponding Bitcoin is locked into the RSK network through a smart contract, and cannot be released until the SBTC is deposited or returned to the contract. That way, the SBTC, and BTC will never “exist” outside the RSK network at the same time. While there is no RSK token per se, it appears that SBTC may be usable or spendable outside of the RSK network, possibly with lower transaction fees than BTC.
An Interview with RSK CEO
We had a chance to interview the person behind this exciting new technology, RSK CEO Diego Gutiérrez Zaldívar. During this interview, we learned that not only will RSK work with Bitcoin, but it may also work with other cryptocurrencies, especially Bitcoin forks including Litecoin and Bitcoin Cash. Read on to see our full interview with dudes name and learn all the exciting details about this incredible project that’s launching soon.
Robert DeVoe: RSK seems like a project that could fundamentally change what Bitcoin is. What do you foresee the platform being used for in the next five or ten years?
Diego Gutiérrez Zaldívar: More than changing BTC, RSK is extending its capabilities in order to create a new kind of internet, which we call the Internet of Value. In that new internet, BTC is the cornerstone where the value is stored and protected, and RSK provides business logic capabilities. During the next 5 years, we’ll have a lot of work bringing together all the decentralized infrastructure that will support the financial and social system of the future. During the following 5 years, the focus will shift to reshape how traditional institutions will relate and share value with the society.
RD: From my research, it appears that RSK will not be creating its own cryptocurrency, but your website makes mention of SBTC and that while it is exchangeable for BTC at a 1 to 1 ratio, the contracts are set up so that they cannot both be freely available at the same time. For those of us who are less technically inclined, what is an SBTC and will Bitcoin users ever interact with them directly?
DGZ: Yes, you are right. Every SmartBTC will be always backed by one BTC. Once a BTC is sent to the RSK lock address on the BTC network, an SBTC is released on RSK network the original BTC cannot be unlocked unless one SBTC is sent to the release address on RSK network. That will trigger the creation of a release transaction on the BTC network.
The main purpose of SBTC’s is to be fuel for smart contracts execution, but given RSK network capabilities (lower transaction cost and faster confirmation times), many Bitcoiners might want to convert some BTC’s to SBTC’s for small expenses and transactions, or if they want to do more complex transactional agreements like escrow contracts.
DGZ: RSK is definitely competitor with Ethereum and other smart contract platforms, but we think that the purpose of the decentralized ecosystem as a whole is more important than any individual project thus we believe in friendly “coopetition“, and many times have shared knowledge with our competitors. Moving from pushing brands into educating about the value of smart contracts and decentralized networks, will create a stronger and more mature industry.
RD: One of the stated goals of RSK is to achieve a Bitcoin transaction speed of 2,000 transactions per second. The Lightning Network has similar goals. How will Lightning and RSK interact with each other in the future? Will they both work concurrently but separately, or will they serve different functions or service different communities?
DGZ: The main difference is that RSK is targeting on-chain scaling while Lightning is focused on off-chain scaling. We think both scaling solutions are needed and that in practical scenarios off-chain transactions without proper on-chain scaling will be limited to servicing only a few tens of millions of users. Therefore, RSK is working both on on-chain scaling through Lumino compression and off-chain scaling with Lumino Network, (a 3rd layer on top of RSK similar to Lightning for BTC) that together will enable a throughput of over 20 thousand transactions per second.
RD: Since RSK is not doing an ICO or offering its own cryptocurrency or token directly, where is funding for RSK development coming from?
DGZ: RSK made a strategic decision of not issuing its own token to avoid misalignments with the BTC ecosystem. For that reason, it went the traditional fundraising route through private strategic investors that not only provided money but also support to grow the RSK ecosystem. RSK is well funded to achieve its purpose of bringing smart contracts to BTC.
RD: A big reason Ethereum has seen a large uptick in use is due to the ease of making ERC-20 tokens and launching separate platforms within it. Will RSK have a similar ability to create tokens and operate platforms within it the same way Ethereum does? What would be a few of the reasons for a developer to choose RSK as opposed to Ethereum for a new token launch?
DGZ: Another strategic decision RSK made was to keep at least one runtime environment fully compatible with Ethereum at all times. Therefore, all applications running on Ethereum, including those based on ERC-20 can be run on RSK without any modification. In terms of developers choice, we think that the decision drivers will be security, cost, and stability. As RSK is secured by the Bitcoin network, the strongest decentralized network in the world, and its subsidized by Bitcoin mining, it has a unique advantage over other networks. The only thing left to be seen is if the RSK team will be able to deliver a more stable and reliable network.
RD: Your official FAQ contains the following statement about why miners should participate in RSK: “This will provide them extra revenues based on fees and allow them to participate in the smart contracts business.” Since RSK does not have its own token, will miners be paid for processing smart contracts with Bitcoin payments? Or is it SBTC perhaps? Could you provide some additional information on how this works?
DGZ: That’s correct. Every time a miner process a smart contract and includes the results on an RSK block, it will get paid in SmartBTC that they can hold or redeem for bitcoin at any time.
RD: What is the best way for fans, believers, and supports of RSK to help the project? Is there any way for people to invest in RSK?
DGZ: Join the Ambassadors program! Besides, there will be some interesting opportunities to invest in RSK infrastructure in the future.
RD: What kind of impact on Bitcoin valuation might RSK produce?
DGZ: Bitcoin has proven to be the safest store of value and the most efficient remittance network. With RSK Bitcoin will also able to lead as a payment and financial network among other things. The long-term purpose of RSK is to enable financial inclusion on a global scale and create the infrastructure that will empower individual across the globe.
RD: Andreas Antonopoulos often talks about the potential future of streaming money. An example of which is an employee that gets paid every minute instead of every month. Could an RSK powered future eventually provide this kind of scalability?
DGZ: Yes, RSK plus Lumino and probabilistic payments being researched by our Chief Scientist Sergio Lerner and his team, has the ability to make money liquid instead of discrete by solving the processing of micro-payments with instant record keeping.
RD: Will RSK work or have any support for alternate Bitcoin forks like Bitcoin Cash or Bitcoin Gold?
DGZ: RSK is already working with the development teams of Bitcoin derived networks like Litecoin and Bitcoin Cash in order to integrate a smart layer on top of them. This will enable peer-to-peer exchange of smart assets like smartBCH for smartLTC, that can later be released on their native networks.
RD: Are there any non-technical issues standing in the way of a wide RSK rollout, such as resistant miners or other naysayers?
DGZ: The main challenge for RSK as for any new network is to overcome the initial chicken and egg dilemma were in order to traction adoption you need to bring the infrastructure providers onboard and in order to bring the infrastructure providers you need adoption. Nonetheless, RSK has received amazing support from the leading companies and enthusiasts from the crypto space all over the world. So we are optimistic that a virtuous circle will be triggered very soon.
The RSK MainNet “Bamboo” is launching today, December 4th. Special thanks go to Mr. Zaldívar for doing this interview with us.
For more information on RSK, visit their official website, rsk.co
What kind of effect will RSK have on Bitcoin? Will Bitcoin smart contracts make a big impact on cryptocurrency as a whole? Let us know in the comments.
Images via Tedx Rio de la Plata, RSK