{ "episodeId": "SLP501", "speakers": { "stephan": { "name": "Stephan Livera", "role": "host", "tag": "STEPHAN" }, "dr_maxim_orlovsky": { "name": "Dr Maxim Orlovsky", "role": "guest", "tag": "DR" } }, "segments": [ { "speaker": "stephan", "time": "00:08", "start": 8.41, "text": "Hi, you're listening to Stephan Livera podcast, a show about Bitcoin and Austrian economics brought to you by swan dot com. So are you wondering about what RGB is? I think it's one of those concepts that maybe people have heard of, but maybe they're not quite familiar with what it is. So joining me today is Dr. Maxim Orlovsky of the LNP BP Standards Association and also of Pandora, and we talk a little bit about what it is, the history of RGB, client-side validation as a concept, what it can be used for, and is it just for tokens or are there other uses of this also? And if you're interested interested in the technical aspects of Bitcoin and you're looking to learn to build with Bitcoin, consider Base fifty-eight. It is a Bitcoin protocol school by Lisa Nugent, also known as Nifty Nai. So if you're looking for a job in Bitcoin development or perhaps you are already working in the space and looking to brush up your skills, Base fifty-eight has classes and materials ranging from beginner developers all the way up to expert level classes. There are online classes as well as in-person intensive classes where you can learn with a guided pathway from Bitcoin Bitcoin and Lightning experts. So for example, the Taproot intensive in-person class is coming up soon. It's gonna cover Taproot, Tapscript, Schnorr, Frost, and MuSig 2. This in-person Taproot class is coming up just prior to TabConf in Atlanta from the fourth to the sixth of September, and it's also on again in Austin on the thirteenth to the fifteenth of November. So go to base fifty eight dot info or see the link in the description to sign up and learn Bitcoin development. This show is also brought to you by the lead sponsor, Swan dot Putting on Pacific Bitcoin Festival. It was a fantastic experience last year at Pacific Bitcoin as a conference, and this time it's gonna be even bigger and better with an awesome range of top-notch speakers, people like Max Keiser and Stacey Herbert, Preston Pish, Greg Foss, Alex Gladstein, Corey Clipston, and a whole range of Swan people, as well as Lynn Alden, Jimmy Song, and so many more. So the dates are October fifth to sixth twenty twenty-three in LA at the Barker Hangar. This is gonna be an amazing experience. Make sure Make sure you grab some friends or family members who are interested to learn about Bitcoin and bring them along. This will be a great experience for you and for your family and friends to meet a whole cast of Bitcoiners who are out there and trying to push this movement forward. So go to pacificbitcoin dot com, use code livera for a discount on your tickets, and remember the dates are October 5th and 6th in LA, and I'm hoping to see you there. And now onto the show. Maxim, welcome to the show." }, { "speaker": "dr_maxim_orlovsky", "time": "02:41", "start": 160.6, "text": "Hello, and thank you for inviting" }, { "speaker": "stephan", "time": "02:42", "start": 162.26, "text": "me. 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 gonna talk to you and hear a little bit from your perspective. So, do you wanna just give us-- for people who don't know you, can you give us a little bit of a" }, { "speaker": "dr_maxim_orlovsky", "time": "03:09", "start": 188.92, "text": "Background comes from the enduro science, from where I moved into the artificial learning, machine learning and artificial intelligence, sphere. And from that, part I went, because basically I wasn't satisfied with the way the, the modern systems work, starting from the academia up to the, up to the actual economics and country. So I got into this, censorship resistance ideas and from- There to Cyberbank and from there to Bitcoin, and, that's where I am, if I would put it really briefly." }, { "speaker": "stephan", "time": "03:46", "start": 226.22, "text": "Great. so yeah, let's get into RGB. And so again, we're gonna try to keep it basic and explain, keep, keep it accessible for everybody. So at a high level, you know, what is RGB like? Why, why do we need this thing?" }, { "speaker": "dr_maxim_orlovsky", "time": "04:00", "start": 239.63, "text": "Yeah, that's a very good question because, per-- first, probably we should start with defining what RGB is, because it had quite a long evolution. And from the, its, inception in two thousand and fifteen till today, it has ch-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 had become potentially need. So maybe that, if that's okay with, Okay. So, the idea of RGB came, in two thousand and fifteen, sixteen, and, the, the, the person who coined the- The idea was Jack Muzukok, 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 has starting happening, popping up everywhere, and, even before Ethereum, there were a lot of attempts, to do that something more than just Bitcoin and, something more than money, you, you remember all these Mastercoin projects and colored coin befo- be-before that? And, Jack Ma, at least what he is telling as a part of his story, he was frustrated with that. It all blows blockchain, it's all very inefficient, and, he thought that it's, it's very improper way of doing tokens on, Bitcoin. And he stumbled upon the idea of Pieter Toet, who was a friend of him, and Pieter Toet was 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 timestamps, on the idea of timestamping, he developed a, a more elaborate cons-- concept of, client-side validation. And, there was also a- The 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 it open timestamps, which was very clear idea. You don't need to put the information to timestamp into blockchain. You don't need to create operation 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 of this Merkle tree is kept outside of blockchain. And when you need to prove something, you provide the document which is not stored on chain, just peer to peer. You provide the Merkle 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-chain. These are non-financial in any way, so it's not related to any assets. Through anything, it's just, proofs that something existed and was known pre-prior to a certain point in time. And you send this information peer-to-peer outside of Bitcoin, outside of Bitcoin network, outside of on-chain data, and the party that receives it validates it on its own side, and you're not requiring all Bitcoin nodes in all the world to do this validation work for all open timestamps, because it's pointless. Like, why everybody needs to validate? So that, that was the birth of that concept." }, { "speaker": "stephan", "time": "07:30", "start": 449.68, "text": "Yeah. So just, just so I can understand, 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 chain, which is obviously not gonna work, right? And no, it'll scale. Yeah, that'll just never scale, and, you know, then I think there's also this idea, this concept of a global state machine, which also kinda doesn't work, right? Like, so I think the paradigm Bitcoin as a 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 at 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 gonna be feasible to have the world's financial transactions done in that way. And so, you know, using Bitcoin techniques and technology, you're minimizing what actually has to go on chain per se. That's kind of a very- Very loose but simplified explanation of what's happening here, right?" }, { "speaker": "dr_maxim_orlovsky", "time": "08:31", "start": 511.08, "text": "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 you 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- As too, in two thousand fourteen, so just recently before the birth of this client-side validation of RGB IDs, was exactly what Peter and Jaccama 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, to work with this compu-- not just developers, but users, and at the At the end of the day, that doesn't scale. Putting the state on chain is just connected, i-is the same as connect a single keyboard to the global computer. And, that's the idea. You don't need the state on chain, you don't need everybody to validate everything, if something isn't part of the global consensus. And timestamp is example of something that is, that shouldn't be a part of the global consensus. And that's why, where, where the, 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, you, you have, you need to have an ability to provably update a state only once and order the, the updates. The state and the sequence. It's the only part where you need the global consensus." }, { "speaker": "stephan", "time": "10:24", "start": 624.21, "text": "So just to give a, an example, if there, if somebody wants to make a, a stable coin, and the idea is you're tracking the transfers of that stable coin, you're, 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 Bitcoin's, chain to help make sure that it's not being double spent, and that's in the sense that, you know, it, it ne- the, as A part of that Merkle tree, and if it's not, then you know something's wrong. Is that correct?" }, { "speaker": "dr_maxim_orlovsky", "time": "10:55", "start": 655.46, "text": "Yeah, you are going in the right direction, but the point is that just putting in hash into the blockchain with the open timestamps doesn't prevent a double spend, because you can basically, let's take a very famous example again, it was coined by Jaccama, like I'm a medical doctor, let's say, gynecologist or something of that sort, who gives the prediction of a pair, 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 cheeky 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 hundred 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 right. One, usually, like a toxic masculine assumption, and, they're not coming to me. Coming to me. And if I was right, or if they come, I say, \"Yeah, I brought a boy here.\" And if I was right, and it is a girl, again, they're not coming to me. So I did a double commitment. I can, I, I don't have a provably unique commitment. So the same with the timestamps. I can create two timestamps into, committing to two different documents at the same time and then reveal just one, the one that With making a stable coin on the client side validation, and that's exactly where RGB was born. So the first thing that happened is that Peter thought he created this concept of single UCL, and the single UCL is an evolution of timestamp to prevent exactly this situation of double spending. So can we modify the timestamping such that we can probably create just a single commitment, and that what was UCL. And, Jack, I'm gonna put that, okay, and now with this primitive, we can make a pro- Protocol for like any token, and we don't need to store the information and the state of the token on chain. We use just a single UST primitive, and we keep the token history, off-chain, and that's what RGB had at the, had, had, had become at the very beginning. So the name of RGB came even from this concept that we had colored coins, which is a wrong way of doing the, tokens on Bitcoin. Now let's have a right way of doing And because it was not colored coins anymore, let's call it RGB like a spectrum of the colors." }, { "speaker": "stephan", "time": "13:25", "start": 805.38, "text": "Okay. One o-one other area, I think maybe, 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, they might say, \"We don't need any tokens, we just need Sats. What do we need other tokens for? \"" }, { "speaker": "dr_maxim_orlovsky", "time": "13:41", "start": 820.91, "text": "Yes, yes, yes, that's what I'm coming to. And, so it was a not very happy. So for instance, those days, so they, they created the initial concept of this protocol, it was quite-- In two thousand se-- seventeen or eighteen, they have presented it, and it was just a tokens, and there were o- other problems like there could be just a single token, and because you can't prevent in client-side validation multiple tokens being sent to the same UTXO, basically it didn't work in these situations. So the, the RGB was the prototype which- You know, I was working just in a world there, where there is just a single token of RGB exists, or you need to create a new output. And I was a friend of Jack, among those days, and I was looking, for the much more program-programmability in Bitcoin, because I was working on the protocol of machine learning, the point not decentralized, but a 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 two thousand, 2018 and, that this will stop the progress and centralize the progress and create again huge powers which will leverage that, that they have just, only them have access to artificial intelligence like governments and so on, and we will get much more worse situation, pretty much what we are coming these days, but I thought that about that in 2018, and I was looking how to leverage that Bitcoin censorship resistance properties in order to get machine learning working in censorship resistant way. And of course, it didn't scale with blockchain, like it was impossible to scale that on blockchain, absolutely, like no, no, no way. And, that's why I have seen that RGB, the idea of this single use cells, is exactly what need to scale arbitrary complex computing 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 world. You can have a true compute Computing on top of Bitcoin, and it can be scalable because this also work on top of Lightning. If you separate the data and the, the 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 away the blockchain, and you can work on layer two as well as on layer one. And you, and at the end of the day, you get a Turing complete computing. Censorship resistant, scalable on top of Bitcoin, and at the potential which I saw in RGB in two thousand, eighteen, nineteen, and in summer, the project has revived because there was certain stagnation the last year because like the, the interest to the tokens on Bitcoin has declined, however, Bitfinex, who, who actually one of the very active participants of this project from the very beginning, they had an interest of bringing the other 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 two thousand and nineteen, and, I decided to join the project as a lead developer, and together with Giacomo, we established an LNPB P 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." }, { "speaker": "stephan", "time": "17:18", "start": 1037.83, "text": "Actually, on this, do you mind just explaining who the- The ecosystem a little bit because, you know, there's different entities. There's for-profit entities and then there's the nonprofit standard entity. So can you just explain a little bit for people who aren't familiar, who, who are the main players, let's say, in, in RGB world today?" }, { "speaker": "dr_maxim_orlovsky", "time": "17:34", "start": 1053.94, "text": "Well, I, I, I will explain how it started and then I will say what, what it 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 F The, venture fund, and they wanted all the companies they invested in Bitcoins here to use RGB, so they also joined this initiative. there was also an 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 personally 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 the 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 nonprofit, organization which will, make sure that the protocol development happens independent From commercial interests. And let's funnel all the funding that we are get-getting for the development through this, organization. And the organization was created and named LNPP Standards Association. What, what is LNPP? LNPP is the, term meaning that Lightning Network Protocol, Bitcoin protocol. So everything we've put it the way that, everything that doesn't require software of Bitcoin, and can be made on top of Bitcoin as a layer. On top of Bitcoin is part of LNPBP stack, and the wordplay was against TCP/IP. Like TCP/IP 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 was clearly that sort of product also, that, that's kind of still the main, one of the main projects of LNPBP association, there more than, than just RGB. But, and basically, I started doing the full-time development of RGB protocol as a 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 of the interest and so on and so forth. So we've been through four years of development. And, the current ecosystem consists of, again, Bitfinex and Tether doing their own project on top of RGB. They don't participate directly with the association anymore since two thousand, twenty-one 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 are independent of- Developers who are interesting, which, there is Fugu Ventures, there is another foundation called Holo Foundation, they provide funding to that for the development, and, of course, there are many companies which we don't even know who do build, who are building something on top of RGB, we heard about several of them. And that is what ecosystem looks like today." }, { "speaker": "stephan", "time": "21:11", "start": 1270.55, "text": "Okay, gotcha. Okay, so, 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 shit about tokens, let's say?" }, { "speaker": "dr_maxim_orlovsky", "time": "21:29", "start": 1288.72, "text": "Yeah, exactly. So i-in two thousand, back in two thousand and nineteen, I didn't give a shit about tokens as well. So for me, RGB was a computing layer on And computing means much more than just tokens or even than just finance, 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 the, you can solve the revocation problem, with the such layer. Because now with the Web of Trust, if you revoke a key, of your own, you have to use key service infrastructure, which is not reliable. And again, you can, like you, one party can present with the information that the key was revoked, 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 signalable event again without the need to, store all the data on chain. So I saw a perspective of com- of converting the token protocol, which RGP was, into a, well, we can say smart contract system, but even more into a computing, layer on top of Bitcoin. The, the- It should be the programmability which Bitcoin was lacking. It should be the programmability that Lightning was lacking. So of course, one can use this programmability to issue, shitcoins 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, it's not a tool to" }, { "speaker": "stephan", "time": "23:15", "start": 1395.03, "text": "be used, okay? Yeah, it's a tool. Yeah. And so that means there are different-- I guess part of that is you're trying to, I- articulate what are the uses of RGB. So as you were saying, you know, 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, et cetera, but I know there'll be maybe an audience who are interested in that because maybe they wanna build something like that with stable coin like features. And then maybe there's other, again, NFTs. Again, I don't care about NFTs, but there might be other people who wanna do something like that, and Like the term, but DeFi, right? Like the crypto kind of stuff, but something like that in a, in a, in a, in a Bitcoin way, but without, let's say, with different, with a, 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, an idea what, what that is?" }, { "speaker": "dr_maxim_orlovsky", "time": "24:09", "start": 1448.7, "text": "You, you mean financial part or the smart contracts? Right." }, { "speaker": "stephan", "time": "24:12", "start": 1452.01, "text": "Yeah. So for example, I think you, I think you've referred to this as BiFi, Bitcoin finance." }, { "speaker": "dr_maxim_orlovsky", "time": "24:22", "start": 1461.71, "text": "The, 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 a market that, provide certain qualities which can't be provided, just by money. And example, a very simple example is a, is a future contract, for instance. I need, corn 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 a 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 fa-financial. It doesn't involve any token, it doesn't involve necessarily, it doesn't involve anything, and if you imagine the hyperbitcoinized world, I really doubt that it would be able to work Work without financial contracts like futures and options. Or I just do a business, I would like to issue shares. What's wrong with that? I can do a Bitcoin only business and I would like to have 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 are just main two properties, the central- Resistance which is needed and, the privacy. And Bitcoin, while Bitcoin is quite bad at privacy, with the client-side validation, the problem of privacy is solved because the information isn't stored on blockchain. You don't have a transaction graph anymore. So even with that, there is a very important use for, of RGB itself, which I didn't said before, other than just programmability, it's a privacy layer of Bitcoin, because, when you operate in RGB, you destroy Enjoy the chain analysis, basically much better than you can do that with a coin join. And, but sorry, let's, let's talk about that in a moment, but go back to B5 and Bitcoin Five. 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 in the middle, that it, does the decentralization. Well, it doesn't do anything, so it's not true. There is There's no decentraliz-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 middle, which nobody can even properly predict how it would behave, because even the formal analysis of the code sometimes misses the hacks. So you still have something in the middle, which is like, okay, not a human, but something else, but still it doesn't solve the main problem. and there is developers of this contract that are taking fee anyway, so it's- Still thing in the media. So I don't believe the crypto solved that problem. And the problem that is needed to be solved isn't decentralization, but censorship resistance and privacy. So, one can say, \"I can run a SQL database and do the future contracts on the SQL database,\" but you wouldn't 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 a financial world on top of Bitcoin and not just outside it? In SQL database is that it provides abstraction 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 ban this shareholder,\" because I must not have ability to do that technical ability, and when I don't have that technical ability, then That is much better, system." }, { "speaker": "stephan", "time": "28:29", "start": 1708.71, "text": "I see, okay, yeah. So 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, 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" }, { "speaker": "stephan", "time": "28:56", "start": 1735.74, "text": "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 own, 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. The move is abstracted. Yeah. It's being facilitated by the system, yeah." }, { "speaker": "dr_maxim_orlovsky", "time": "29:26", "start": 1765.74, "text": "And that's very important actually. It's the important is 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 first 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 a clear indication that Market needs this stuff. And the second, they all had a form of bearer rights, meaning that, if I'm 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, which is very sim- Similar to a bit-- to gold being illegal, to be, held by US govern-- US citizens back in the days of the end of the gold standard. and this right has been withdrawn. Now, if you are a shareholder, the approval, of your shareholding is the ledger and the entry in 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 the s- jurisdictions where you may have, bearer rights shareholding. So if you have a company on BVI, you have the certificate which you put into the, cell, cell or into a safe at home, and nobody in the world would know that you're a shareholder. There is no way for regulators to come into the office of BVI company and ask the list of shareholders, because there is none. Like, you don't know who holds the certificate, because I can go to you and sell it directly, and nobody in the world would know that. And once you get into the ledger 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 isn't about decentralization, but about centralization." }, { "speaker": "stephan", "time": "31:45", "start": 1904.64, "text": "I see. Yeah. I, 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 some corporate governance thing? Then shareholders can" }, { "speaker": "dr_maxim_orlovsky", "time": "32:01", "start": 1920.73, "text": "publish their names." }, { "speaker": "stephan", "time": "32:02", "start": 1921.99, "text": "Yeah." }, { "speaker": "dr_maxim_orlovsky", "time": "32:03", "start": 1922.61, "text": "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 isn't nothing in the world how you can stop him from doing that. I see." }, { "speaker": "stephan", "time": "32:20", "start": 1940.18, "text": "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 ten percent of this company.\" No, it's like actually, you can verify it" }, { "speaker": "dr_maxim_orlovsky", "time": "32:33", "start": 1952.61, "text": "The bearer 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 holds nothing because, I can't sell my shares. And that is where censorship comes into place. And when we move back to the bearer rights, I can do that OTC. But today, with, 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 world today is broken in that regard, it's completely centralized and censored, 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 starts in terms of finance. So if we are talking about finance Application of RGB is Bitcoin Finance. RGB is a bearer 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 a digital thing, and that's it. And unlike with a paper thing, you, you can of course verify, you can check the signature, but I can con- 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 the single UCEIL primitive, which probably creates a singular spending committing down to the Bitcoin transaction." }, { "speaker": "stephan", "time": "34:12", "start": 2052.0, "text": "I see. And that's," }, { "speaker": "dr_maxim_orlovsky", "time": "34:13", "start": 2053.32, "text": "that's where 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 it." }, { "speaker": "stephan", "time": "34:25", "start": 2064.99, "text": "Gotcha. 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- It could be stablecoins or 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'd 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 wanna just explain a little bit more from a technical perspective? Now, I understand today it's like most of the RGB stuff is on chain, but the idea is to sort of move it off chain. So could Explain a little bit more about the technicals of how to achieve some of these ideas and, and maybe explain a little bit about the single-use seal as well." }, { "speaker": "dr_maxim_orlovsky", "time": "35:10", "start": 2110.38, "text": "Yes. well, the, the concept is very simple and at the same time it's very hard to explain. Like, it's even, I wasn't too 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, you take so, 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 get buried into certain amount of blocks, then I can prob-probably present information of the probability that this is final. And of course, in the history- Through a blockchain, I can't double-spend, UTXO in, in the mined blocks because, like, it would be a valid, blockchain then. so that's clear. If I have Bitcoin UTXO, I can spend it only once. So can I extend this property outside of blockchain? Can I extend this property out of Bitcoin as a coin from BTCXO? Well, I think I can. But let's do it right now. We can do a, a simple version of RGB product called Justin Words. We don't need anything. Because this protocol is purely, purely logical. So the way how we implement it, I'll be writing on a paper or in a 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-use seal 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? Yeah. 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 pa-- some other people, I will tell that my name is Bob, for instance. Like, no, it doesn't work like that. We would 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 by signing with, with, Key or with the address, so you know that I do control this UTXO, and I'm saying that, I, when I change my name, I will spend this UTXO. And inside the transaction, which will be spending this UTXO, this will be a singular transaction. In the first output, I will put a commitment to my new name." }, { "speaker": "stephan", "time": "37:50", "start": 2270.07, "text": "Gotcha. Okay. How" }, { "speaker": "dr_maxim_orlovsky", "time": "37:51", "start": 2270.99, "text": "many times can I change my name?" }, { "speaker": "stephan", "time": "37:53", "start": 2272.83, "text": "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" }, { "speaker": "dr_maxim_orlovsky", "time": "38:02", "start": 2282.2, "text": "Can I put two commitments, there is just a single transaction inside that single transaction spending that UTXO object, 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 we aren't talking to each other, because you can track this UTXO on chain and you see, oh, it's get spent. Now, if I didn't said that to anybody else, and it's just me and you, nobody in the world even would know that something happened related to this UTXO. spent. 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." }, { "speaker": "stephan", "time": "38:53", "start": 2333.31, "text": "When it comes to sending Bitcoin on-chain transactions, I always go to mempool.space to target the fee for my transaction. On the site, you can see the different fee levels that are associated for low, medium, or high priority transactions so that you can set your fee accordingly. And of course, mempool.space is a comprehensive explorer. You can see all kinds of things, not just the mempool and the blockchain. You can explore things like the Lightning Network, you can find other Lightning nodes to connect with, you can search your transactions there, and with Mempool.space, you don't have to trust a third party because it's all open source and free software. You can host it yourself and run it for yourself, so that way you are calling against your own server. So mempool.space are also coming out with some new features and keep an eye out for the mempool accelerator integration which is coming. Go to mempool.space to find out more. As we say in this space, not your keys, not your coins, and CoinKite dot com are making it easy for us to secure our coins and keep them away from exchanges or custodians. So over at CoinKite dot com, you can get a range of gear that will help you. So for example, the Coldcard, the latest edition is the Mark IV, is a fantastic device. It's ultra secure, it's a great way for you to take your coins off the exchange, and it's very easy to set up. So some people really overplay how difficult it is to use You can, if you're a beginner, you can just get a USB-C cable, plug it into your computer, and use it easily with software such as Sparrow Wallet or Specter Desktop, and you can just plug it in and follow the instructions to write down the twelve or twenty-four words, and you have a pre-pin and a post-pin, and then that will allow you to generate addresses and spend and receive using your cold card as a hardware signing device. So this is a great tool for you to secure your coins. To go and get yours, go to coinkite dot com and use code Liver For a discount on your cold cards. And now back to the show. 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 UTXO I committed to, and my client is watching the chain and then realizes, oh, there's been a movement there. Okay, Maxim changed his name." }, { "speaker": "dr_maxim_orlovsky", "time": "41:02", "start": 2462.16, "text": "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 of Or block space." }, { "speaker": "stephan", "time": "41:14", "start": 2473.9, "text": "So how does that work?" }, { "speaker": "dr_maxim_orlovsky", "time": "41:15", "start": 2475.01, "text": "Well, there, there is actually multiple ways, like the, the, there were ways which were existed before, like pay-to-coin or side-to-coin. 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 a Taproot operation commitment or Tapred for simple. So basically, you use the same operation, but instead- Putting it into the UTXO, you add that to the tap, so basically you have a taproot output with the same, thirty-four bytes in, in the output, which is basically a thirty-two byte, key, but this key inside is tweaked with the commitment which is put inside the taproot tree in a certain position. So basically, that, that's why, for instance, ordinal inscriptions and all other related stuff is so retarded because, like, there is my- 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, they, they went out of stone age without knowing anything about technology and computer science and created some, some crap. So," }, { "speaker": "stephan", "time": "42:29", "start": 2549.0, "text": "well, yeah, okay. So, I, 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, 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?" }, { "speaker": "dr_maxim_orlovsky", "time": "42:47", "start": 2566.61, "text": "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 document saying that I issue this asset and I put this asset, we call it, I allocate this asset, to this UTxO or a number of UTxOs. So this UTxO holds this amount of asset, that UTxO holds that amount of asset, that UTx That's it, that's the whole of the issue. I can write it on paper, doesn't matter. And then, those who have those xPub need to know about that. For instance, it's my xPub, so I issue a set to myself, it's the simplest way. Then, when I want to send the, spend this xPub, I'm talking to you. So, let's say you would, do you like to accept my shitcoin? And for some reason, you, you, you want. Like, yes, yes, I really like your shit Bitcoin, this is the paper saying that I issued you two 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 SHIB coin which I just issued, and for some reason you need it, and, you say, \"Yes, I'm happy with the issue.\" So I'm spending this UTXO and in the transaction spending this UTXO, which is the single transaction, I put a commitment to another docu- another document, and this document called state transition That I take out of million of the assets I issued, reference to the issuance document, I send hundred of these sheet coins to a UTXO which you provided me with, the UTXO that you control, and the change, the change goes back to some other UTXO which I own. 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 hash into the transaction that spends that UTXO." }, { "speaker": "stephan", "time": "44:41", "start": 2680.96, "text": "Okay, so just a Walk me through this part. Does this mean currently every state transition has to hit Bitcoin's blockchain?" }, { "speaker": "dr_maxim_orlovsky", "time": "44:49", "start": 2688.89, "text": "No, it has to hit Bitcoin transaction, but it can exist inside the Lightning channel." }, { "speaker": "stephan", "time": "44:53", "start": 2693.11, "text": "Okay, so it doesn't have to hit the chain. You can keep it off-chain. Yes. Okay." }, { "speaker": "dr_maxim_orlovsky", "time": "44:57", "start": 2696.99, "text": "Yes. I, it, 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 Ark world where, like, we have CTV- A soft fork or something, it could be a transaction which isn't a part of the channel and just, CTV somehow commits to something, but for you, it should be a final transaction. You should know that, like, eventually, you can always fail back to blockchain." }, { "speaker": "stephan", "time": "45:28", "start": 2727.67, "text": "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, But then that channel force closes, like let's say the other guy force closes my channel, do, do I lose my asset or how does that work now?" }, { "speaker": "dr_maxim_orlovsky", "time": "45:50", "start": 2749.53, "text": "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. Right. So your UTXO 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" }, { "speaker": "stephan", "time": "46:10", "start": 2770.3, "text": "to it. I see, 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-" }, { "speaker": "dr_maxim_orlovsky", "time": "46:24", "start": 2783.75, "text": "Yeah, but it, it, it might not move without your signature." }, { "speaker": "stephan", "time": "46:27", "start": 2787.07, "text": "I see, but I would have pre-signed that, right? Like I might have pre-signed that transaction for the other guy, I guess. The expense." }, { "speaker": "dr_maxim_orlovsky", "time": "46:33", "start": 2792.86, "text": "Well, if you have, spending for your output, you ca- it's better you, for you Spending this amount, so it's not" }, { "speaker": "stephan", "time": "46:45", "start": 2804.91, "text": "unspent. 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 UTXO, like in this example, that I wouldn't keep it on something that's kind of in flux, let's say. so I guess I can kinda get that part of it. And then, so could you explain a little bit around RGB Lightning, because as I'm understanding it, it's almost like a, it's, it's Lightning and yeah, well, it," }, { "speaker": "dr_maxim_orlovsky", "time": "47:14", "start": 2833.64, "text": "it, 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 requires changes is the software, because, like Bitcoin transactions are still the same, it's just the software that, that need to take the RGB state into account when creating a output, because it needs to put the commitment into that output. So in this way, basically RGB protocol Otherwise, RGB is abstracted, so it can work on term, on top of Lightning, on top of ARC. Maybe tomorrow we would have like Super ARC. It will work on everything that is Bitcoin transaction, as, 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, LMG, for instance, today. Yeah. And you need to have an, a lightning node that is aware of, of RGB. Today we have two, two prototype things. The first one is, LMP node, which was done by, this LMPDP Standards Association, and it's deliberately designed to work not with just lightning, but also with other RGB and the second one was done by Bitfinex team of Federico, who we were talking to. They took the, LTQ and they took the LTQ node, which was recently released, and they, added RGB support to their own fork. So we have at least two implementations today. We plan to work on-- We, we did a preliminary investigation with, with Sea Lightning and with Christian Decker, and we see that it is possible To add RGB to C-Lightning with plug-in infrastructure, the slight modifications which are needed to the plug-in APIs in C-Lightning, but they are like very tiny and they can be merged into the main, so we may have an RGB plug-in for C-Lightning as well, and that, and gives us, one mobile node, actually two mobile nodes, one just not yet widely used, which is LNT, but another LDK, which is used in mobile apps, C-Lightning, and that's already quite, quite a lot And the interesting part is that you can, you just need two parties to, like, if we have a channel and we would like to add RGB assets, it's just me and you who needs to install the RGB aware Lightning, but not the rest of the network. So-" }, { "speaker": "stephan", "time": "49:42", "start": 2981.77, "text": "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, the default version of a particular Lightning node, they might need to run the RGB fork of that, and then- And 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? Correct, correct. Yeah. Okay. and so let's talk a little bit about, v zero point one. I, 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 g-global state in RGB contracts. So I'm curious, how, how are you achieving that?" }, { "speaker": "dr_maxim_orlovsky", "time": "50:36", "start": 3036.11, "text": "Yeah, small note, it's zero point ten. So, I'm sorry, zero point ten, sorry about that. Yeah, yeah, yeah. So, yeah, yeah, yeah. So it's tenth iteration, not, not, not 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 for, There is no vulnerability that's discovered, so we are finally, we're able to shape the RGB into, into the smart contract system we would like to have. and, the one part of the story was, 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 validation and single UTXO, you see that what about the state that isn't owned by some party? What, what you can do with that? Like how, how you can, manage it, and that's what is global state. The global state is something that isn't owned by a well-defined party. 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 a-- anybody. And the fact that, kind of they're not owned doesn't mean that they can't be changed, because the, the, the, the, 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 aren't integrate-interacted. So basically, you have a distributed system where you're able to update something that isn't 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" }, { "speaker": "stephan", "time": "52:23", "start": 3142.96, "text": "data." }, { "speaker": "dr_maxim_orlovsky", "time": "52:25", "start": 3144.78, "text": "if you want, that other parties, Somebody else unrelated to the protocol to know this data, you just can publish them in, any, any data network. what is data network? Well, it can be anything. You can use Nostr, 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 w-with this global state, you can think, you can have, different stuff which can be useful in some BFI, Bitcoin Finance case. Gotcha." }, { "speaker": "stephan", "time": "53:02", "start": 3181.93, "text": "Okay, great. and so in terms of RGB Lightning, can that, can that be used to just transfer Sats today, or is it more like the, the, they're just tra- you know, people are just using the Lightning Network like today that's not RGB aware? Does that- That makes sense or no? Yeah," }, { "speaker": "dr_maxim_orlovsky", "time": "53:20", "start": 3199.58, "text": "well, you, you can transfer sets without RGB today with the Lightning Network, so you probably need some reason to do the set transfer. One of the reasons m- could be that you would like to add more programmability to sets, so more complex conditions, and that's where you would need to put the sets into RGB, and then you will be able to transfer them in more elaborate way using the Lightning Network. I see. Yeah," }, { "speaker": "stephan", "time": "53:44", "start": 3224.2, "text": "so it's more like maybe a person wants access to this RGB ecosystem, and because of After that, they will run an RGB Lightning node or client, and then off of that, now they're sending sats around because they wanna use it to issue tokens and do different operations in that ecosystem. Okay, got it. We should also chat a little bit about, I, I know, you're also involved or I think you're, perhaps you're leading a team, doing this, the My Citadel wallet. Do you wanna just talk a little bit about that?" }, { "speaker": "dr_maxim_orlovsky", "time": "54:12", "start": 3251.66, "text": "Yes, well, it's a wallet which we started doing as not as a start, not as non-profit, 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, we need something that is able to work with RGB assets. Eventually, it has moved, further than that. So basically, because we need to do this very, very cheeky thing of tap return Tapred 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 MyCitadel wallet, additionally To the support of RGB, has a qui-quiet support for wallet descriptors or output descriptors for Miniscript, so you basically, you can use MyCitadel 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 consider Constructed in, in, in the user interface. That's what 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 consequence, yeah. Yeah, interesting to" }, { "speaker": "stephan", "time": "55:57", "start": 3357.05, "text": "see though, yeah, that it's out there and even people who don't want RGB, that could be a useful feature for them, maybe depending on what they wanna do, in terms of their complicated multi-signature setup to have more advanced things there. Yeah, that's interesting to see." }, { "speaker": "dr_maxim_orlovsky", "time": "56:10", "start": 3369.98, "text": "Yeah, yeah. And it was one of the first wallets or probably the first wallet who was supporting Taproot, and Taproot script based spending. And, one of the ideas that with that wallet you, the wallet is fully abstracted from, from, private keys. It doesn't ever touch it. It creates a PSBTs which can be signed with a 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- Signer," }, { "speaker": "stephan", "time": "56:43", "start": 3402.68, "text": "so that's quite- Oh, I see. So it's like key agnostic, let's say, and you can save a, a PSBT file, load that into the other wallet, sign it, and then bring it back to, yeah, okay. All right. Gotcha. Like just like offline signing with, let's say, Specter 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" }, { "speaker": "stephan", "time": "57:11", "start": 3431.26, "text": "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." }, { "speaker": "dr_maxim_orlovsky", "time": "57:24", "start": 3444.35, "text": "Yeah, that's, 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 the private key, you lose your Bitcoin, and you need to keep now a wallet descriptor. Well, for trivial wallets, you can You can recall it, but still you need to remember. But if you have some complex setups, multi-sigs with the time locks, you need to keep the descriptor. If you lose it, it will be really hard to recover the funds. So, 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 stole them. If you lose RGB client-side data nobody can s-still 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. In RGB, 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, a party who sends you funds needs to be constantly online. So later when you get online, you can grab the data from the party, right? Yeah, yeah. But you can reuse existing relay networks. One of the projects we are working on is to use, nostr 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. And in Lightning, where you have very, strict connection, much higher interactivity requirements and very, very strict connections, on the data propagation, which must be Lightning itself. again, if you're using RGP over Lightning, it's nothing because, you already have a, you know, the interactivity requirement by Lightning itself, so RGP doesn't add a lot of problems. So yes, there, there, there are some trade-offs, but they are normal to Bitcoin protocol. Yeah." }, { "speaker": "stephan", "time": "59:41", "start": 3580.88, "text": "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?" }, { "speaker": "dr_maxim_orlovsky", "time": "59:52", "start": 3592.48, "text": "Yes, well, there, there is quite a, a lot of things which may happen next. First of all, of course, we are looking for projects starting using RGB four zero. We are still, I think, some time from it, so even we, like The, the first thing I need to explain, and there is a lot of misunderstanding about that, people asking, \"Is RGB in mainnet or in testnet?\" the problem that RGB is not in net, RGB is not a network. So it's like the same as 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 go, if I drive outside of my private space, it's on the mainnet. House, it's, it just that. So the same with RGB, there is no network. it's, it's not connecting to the, there is no, there is thing we call RGB node, but it's not node. So we, we probably made a improper decision to make, make, make, to call, name it node, because it doesn't connect to other peers. It's just a application that does something in the background. So, in RGB there is no network, and you issue asset, when you issue the asset, you issue it to a specific, Mainnet and testnet, it is you as an issuer who makes this decision. And, basically at the moment when you issue RGB on mainnet, it is on the mainnet, and each smart contract in RGB is isolated from other smart contracts, meaning that it's, it's-- you can think about a smart contract in RGB as a shard, blockchained in itself. It's not a blockchain, but like as 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 testnet unless there's Some significant economical activity already happened on RGB, proving that the system is secure, because like we, we have test coverage, we-- but we still don't have, formal audits or audits, and that's what we are looking for for the next months, and we have, several, companies who are willing to do this audits, because basically, we're a nonprofit, we, we have very tight funding, we don't have, sufficient funds even 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 RGB as 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 let's not maybe discuss it next time because- I don't want to spend too much time on that direction. the second thing we are looking into is very, very, very interesting and that's a huge thing. And, like, let, let's start with the vision. Like, you asked about what why RGB is needed. I think that, the, at the end of the day, there will be no Bitcoin blockchain because, it's a kind of, thing we share with Jack Ma 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, all these problems are coming from blockchain. And the question is, but wow, what, what if not, what if not blockchain, how you can do Bitcoin? Well, the answer was, you can't. That's why we have Bitcoin blockchain. So even if it's bad, there is no other way of making something like Bitcoin without this technology. 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, as much as possible, to remove all the data, even UTXO set, and still maintain Maintains some sort of, single sealed primitive, and, we've been looking into this direction for three years already, and finally we have some, 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 con- containing all this client-side related data commitments to a very large number of transactions, which can be millions or billions of transactions, and, it does this single UTXO, premit 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 UTXOs set and the ownership from blockchain." }, { "speaker": "stephan", "time": "01:05:10", "start": 3910.72, "text": "So" }, { "speaker": "dr_maxim_orlovsky", "time": "01:05:11", "start": 3911.5, "text": "the," }, { "speaker": "dr_maxim_orlovsky", "time": "01:05:19", "start": 3919.89, "text": "the, this is- Is it kind" }, { "speaker": "dr_maxim_orlovsky", "time": "01:05:29", "start": 3929.2, "text": "of like a side chain? No, no, Construct and you can piggyback to the security of other chain. But, it's not right chain because you aren't moving Bitcoin to prime. You're 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, lock them to two of two multisig with a self-federation. But again, there is no trustless way to get out. So once you moved Bitcoin to RGB, you can move Bitcoin to RGB trustlessly. But you can't get out of RGB trustlessly. There will always be some, some sort of assumption, and that's, that's, a pity thing because, it creates a quite a large threshold. We understand that, but this isn't just problem of RGB, it's basically problem of, moving Bitcoin to anywhere. So with the current Bitcoin, consensus, it isn't possible. But anyway, so we have this idea of, further extending the client-side validation and making Bitcoin more privable, more scalable. At least it will be possible with a prime for all assets or all contracts except Bitcoin itself, and when eventually Bitcoin will get, soft fork 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 into Lightning nodes up to providing More high level ways to write a complex smart contracts 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, Turing complete verification some if you need something fancy. For that you have, assembly language, which is very low level, and we are working on more high level language which is called Contractum, which is functional, and we'll be able to, with that language, you will be able to create complex smart contracts like, the cryptocurrency. Taproot based stable coins or liquidity pools and many, many other things." }, { "speaker": "stephan", "time": "01:07:58", "start": 4078.71, "text": "Okay." }, { "speaker": "dr_maxim_orlovsky", "time": "01:07:59", "start": 4079.03, "text": "So these are directions we are looking into." }, { "speaker": "stephan", "time": "01:08:01", "start": 4081.25, "text": "The prime one seems a little concerning to me though, like if the idea is that you're trying to move Bitcoin off of Bitcoin per se, then who's gonna-- Are you presuming then that there'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 ex- Explanation on that or" }, { "speaker": "dr_maxim_orlovsky", "time": "01:08:24", "start": 4104.84, "text": "the prime is not about moving Bitcoin, the prime is how you can do something scalable, censorship resistant, and private without doing a blockchain. So the prime would RGB, can work without" }, { "speaker": "stephan", "time": "01:08:36", "start": 4116.51, "text": "the, other tokens or other functionality, you know? Well, there" }, { "speaker": "dr_maxim_orlovsky", "time": "01:08:42", "start": 4122.9, "text": "is no other token. There, 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." }, { "speaker": "stephan", "time": "01:08:53", "start": 4133.6, "text": "Gotcha." }, { "speaker": "dr_maxim_orlovsky", "time": "01:08:54", "start": 4134.7, "text": "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 soft fork or everybody to agree. No, it's a decision of each 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. So that's, 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, 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 would be stolen due to some bugs, well, don't move. That's very simple." }, { "speaker": "stephan", "time": "01:09:44", "start": 4184.92, "text": "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 there, 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 futures or this kind of thing?" }, { "speaker": "dr_maxim_orlovsky", "time": "01:10:17", "start": 4217.86, "text": "well, it, it pretty much depends on which type of future you would like to have. but basic idea is that, you lock certain amount of assets or bitcoins to a condition, which is to a incomplete condition. Well, first, first of all, you can do futures even with a bitcoin today using DLS." }, { "speaker": "stephan", "time": "01:10:39", "start": 4239.43, "text": "Right." }, { "speaker": "dr_maxim_orlovsky", "time": "01:10:40", "start": 4240.14, "text": "But if you use DLS for building the futures, you don't have a second asset, so you, you can't have a future without the second asset, even if it is a tokenized 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, is, is an asset in terms of RGB. So today with the Bitcoin, you can do DLC, but what would be, like, on one side you have Bitcoin, what do you have on the other side? Like colored coin, master coin? No. So with RGB, RGB brings the asset, so you just take the asset in RGB, you take the DLC, and you do the future. So that's the very simple thing. If you d-want to do something So without DLC, because DLC itself is quite complex thing, you can, bring two assets into RGB and write the two incomplete conditions about when the asset can be spent. So that's, that's the two ways of, of doing that with RGB. I" }, { "speaker": "stephan", "time": "01:11:39", "start": 4299.11, "text": "see. Okay. Yeah. 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 wanna find out more about you?" }, { "speaker": "dr_maxim_orlovsky", "time": "01:11:51", "start": 4311.94, "text": "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, all code, source code repository standards, specifications, inst-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 lnpbp, lnp slash bp dot org, which is site of association where you can find more about other projects related to Lightning Network and Bitcoin, Bitcoin descriptor wallets. And, if, if somebody looking for to find myself, well, it's much harder. I'm trying to hide from people to do some work sometimes. But, you can go on either GitHub, dr slash Orlovsky, or on Twitter. It's probably the last two places where I still present. Twitter is also dr low underscore Orlovsky. Yeah, I was looking for that. so that's, that's it. Great." }, { "speaker": "stephan", "time": "01:12:56", "start": 4376.15, "text": "Okay. Well, thank you for joining me and, chat again sometime soon." }, { "speaker": "dr_maxim_orlovsky", "time": "01:12:59", "start": 4379.9, "text": "Yes." }, { "speaker": "stephan", "time": "01:13:01", "start": 4381.26, "text": "Show notes are available at stephanilivera dot com slash five zero one for this episode. Thanks, and I'll see you in the Citadelles." } ] }