With all the excitement about blockchain technology and crypto-currencies, it is sometimes difficult to stay focused on the real-world applications of this new paradigm. Two projects that are making waves in both the crypto, token promotion and broader business worlds are RSK (the first smart contract system built for Bitcoin) and Oyster. The objective of this blog post is to share some insights from a review of these products, as well as give you a glimpse into what may be coming soon for other blockchain products.
1. “The Honey Badger Of Money”
RSK is the first open-source smart contract platform with a 2-way peg to Bitcoin. The project was founded in June of 2016 by Rootstock, a blockchain startup incubated at the Digital Currency Group (DCG) and headed by CEO Diego Gutierrez Zaldivar. RSK is currently in alpha testing and will be launching their mainnet during the second half of 2017.
In essence, RSK combines the Bitcoin core infrastructure with an Ethereum-style smart contract execution environment. In doing so, RSK bridges these two ecosystems, allowing users to utilize advanced smart contracts on top of a sound Bitcoin blockchain.
To accomplish this goal, RSK has developed its own unique version of the Bitcoin virtual machine, which is dubbed the “Waves VM”. As you can see from the above image, this version of the VM is fundamentally different from other implementations (e.g., from Ethereum or Rootstock itself in another project). Instead of having its own programming language, RSK uses a subset of the Solidity language (the default choice for Ethereum). Why have their own language when Solidity works just fine? Because interoperability was one of the primary design goals for RSK. Why use Solidity instead of a contract-specific language? Because developers are already familiar with Solidity and it has been battle tested by thousands of projects running on Ethereum. News approved site is mentioned here.
2. “You Can’t Have Your Cake And Eat It Too”
In the spirit of interoperability, RSK is being developed on top of Bitcoin’s core infrastructure. This means that in order to connect RSK to other blockchains, you need to be running RSK on top of Bitcoin. Users will be able to connect to other blockchains by creating “child chains”. Every blockchain has its own unique set of rules that govern how transactions get processed. However, there are many roots (this will make more sense later) in common between the various chains that are able to connect them together. For example, many users want the ability to send value from one block chain to another without having to go through a central authority (i.e. a bank or payment processor). Lacking a digital equivalent of “international money”, this is what RSK is looking to solve.
The first use case that RSK aims to deliver on Bitcoin Core is called the “Lightning Network”. This feature will enable off-chain transactions between Bitcoin users and blockchain 2.0 smart contracts on the RSK network. As you can see in the above diagram, transactions will be processed between BTC users and smart contracts that reside on their own blockchains. The beauty of this solution is its ability to scale in a distributed manner. In other words, this type of functionality will allow RSK to handle massive numbers of transactions.
3. “We Will Ignore The Elephant In The Room”
The second use case that RSK is working on is called “Rootstock”, which refers to the ability to run a smart contract system built for Bitcoin on top of the Bitcoin blockchain. In other words, it will be like having an ethereum-style virtual machine running on top of BTC for outreach. This idea is taken directly from Ethereum’s playbook, as its developers also started out by building their own blockchain supporting smart contracts (Ethereum). With Rootstock on RSK, you can build your own blockchain with its own rules and native assets (without forking Ethereum). In addition, you can then write smart contracts using Solidity (the default language for Ethereum) and run them on Rootstock with the RSK virtual machine.
RSK goes a step further and enables you to use Bitcoin transactions as the settlement mechanism for your smart contract system. This is a big deal. Unlike many other blockchain products, RSK is not trying to replace bitcoin but rather is built on top of it. Therefore, unlike many blockchain projects that are built on top of Ethereum or other blockchains, you can still rely on Bitcoin’s secure and decentralized architecture to provide the settlement layer for your system.
4. “I Want Legitimacy”
People want their blockchains to be used by real world companies and organizations, but they also want the guarantee that these corporate participants are not going to change the rules of the system or take over control of the network. RSK has been designed with this precise objective in mind. RSK does not require any changes to the Bitcoin core software (it runs as a sidechain), this means that all of Bitcoin’s existing security guarantees are still in place. It also means that since RSK must pay miners fees to confirm its transactions, there is an economic incentive for miners to protect it from attackers and ensure its survival on the network.