Crypto discussions have always been dominated by price, which is unfortunate yet understandable. This price-focus is what has allowed scams, pumps, shills, and just massive undeserved hype to dominate the narrative. Buried among this chorus are discussions about what crypto should really be about—the technology and its potential to change the global financial landscape as we know it.
Setting itself apart from the crowd is RSK (aka Rootstock), a project with relatively little publicity, despite having already launched its genesis block over a year ago. The team, strong believers in the long-term potential of cryptocurrency, has focused most of its resources toward developing the technology, and what they have achieved so far speaks for itself.
For this article, I conducted an interview with Gabriel Kurman, one of RSK’s co-founders and its community director. The following article, which delves into various topics from RSK itself to the power of crypto in Latin America, is derived from our fascinating and wide-ranging discussion.
First, a quick primer on RSK. Although they have been working hard for over four years on this project, this may be the first time you’re hearing of RSK. It is an open-source smart contract platform built on top of the Bitcoin network. Think Ethereum, but for Bitcoin instead. Of course, unlike Ethereum, Bitcoin was not built with smart contracts in mind which is why RSK is a sidechain that enables smart contract functionality. While RSK does have its own token, RBTC, it is pegged to BTC on a one-to-one ratio.
Bitcoin and Ethereum: The Dilemma behind RSK’s Birth
Unsurprisingly, the founders of RSK have been involved in both Bitcoin and Ethereum since the early days. Sergio Lerner, RSK’s co-founder and chief scientist has been involved in Bitcoin since 2011, being a security auditor of the Bitcoin Foundation in the United States where he apparently also discovered six out of the ten most important vulnerabilities in Bitcoin.
Recognizing the potential of smart contracts early, Sergio had presented a paper for a smart contract platform called Qixcoin. Although this never left the paper stage and was focused on online poker, it piqued the attention of Vitalik Buterin, co-founder of Ethereum, who then asked him to also be a security auditor for Ethereum.
Once the Ethereum whitepaper came out, however, the RSK team were not fans of the fact that it wasn’t built on top of the Bitcoin network. This left them in a dilemma—should they choose between the power and security of Bitcoin or the potential of smart contracts?
They decided to merge both, and thus RSK was born.
Why the Ethereum Community is Highly Supportive of RSK
Since RSK could be considered as a direct competitor to Ethereum, it might surprise you to learn that the Ethereum community is actually one of RSK’s biggest supporters.
The reason the Ethereum community is so supportive is simple—RSK gives them optionality. While no doubt many in the Ethereum community are (of course) supporters of Ethereum, in the crypto space, most reasonable people believe in the technology but are agnostic as to the platform. So in their minds, Ethereum is an option (perhaps the primary option for them), but so is RSK. The RSK team has made sure RSK is compatible with Solidity, the Ethereum programming language.
Ethereum is moving a new Proof-of-Stake consensus, which carries inherent execution risk. After all, it is an untested and unproven model. Should there be any issues with Ethereum or should some of the developers not like the direction Ethereum is heading, RSK will naturally benefit.
RSK believes that Bitcoin Proof-of-Work, with its reliability, track record, and immense hashing power is the best bet for the ‘Internet of Value’ they envision. That said, they are willing to change direction should a better alternative emerge, however at this point they see no better option than the Bitcoin network.
RSK believes that compatibility is more important than competition, because if the crypto community are unable to collaborate, competition will become irrelevant as the whole crypto ‘experiment’ will fail.
Bitcoin Miners are Already Enthusiastically Supporting RSK
RSK uses a merge mining Proof-of-Work protocol, which allows the very same miners that secure the Bitcoin network to also help secure RSK. Currently, RSK already has 16EHs of hashing power which represents approximately 45% of all the Bitcoin network’s hashing power and the support of five of the major mining pools. Miners are naturally incentivized to merge mine because of its built-in incentives, namely they get 80% of all the fees generated in the platform at zero cost (the other 20% goes to the RSK team which will use part of that to reward RSK and Bitcoin full nodes).
While 45% is an impressive number, it was not something RSK achieved overnight. Rather, it was a long and slow process in slowly building the trust of the mining community. Some of the first mining pools that supported RSK were Slushpool, Antpool, Bitfury, BTC.com, and F2Pool; RSK made sure to work with them directly to provide support and make sure their software was compatible with RSK. As a result, RSK’s relationship with the major mining pools are now very strong.
RSK’s extensive list of partners
The RSK Roadmap and What’s Next in RSK’s Development
The next big thing RSK is looking to launch is Lumino, which is its offchain payment channel. If you think of the Bitcoin network as being the first layer and RSK as being the second layer, then Lumino is the third layer. Since it’s completely offchain, it should add an even higher level of scalability on top of RSK. The RSK team is currently working around the clock to launch the first version of Lumino on the Consensus conference in May 2019.
The second big thing currently under development is the RIFOS platform (Root Infrastructure Framework). Think of this one as Amazon Web Services for the blockchain. The idea behind RIFOS is to handle the ‘administrative’ stuff of dApp development—things like naming and storage services. RSK considers this critical before true long-term use cases will be able to develop.
The RIFOS platform also has its own token, the RIF token, which is now listed on both Bitfinex, CoinBene and Cashierest. What make the RIFOS platform interesting is its interoperability with RSK, Bitcoin and other networks.
For instance, the RIF Directory service will allow users to use easy-to-remember aliases instead of public addresses while the RIF Communications service will facilitate the “handshake between users. Further, the RIF Payments and the Lumino network will allow micropayments which will be used for the mining and Full Node rewards. The RIF Storage service will also play a key role on Full Node rewards.
While RIFOS and RSK were initially separate but related entities, they have now merged as a “for purpose organization” so they can seamlessly work together to achieving their common goal of building an internet of value on top of Bitcoin.
On RSK’s Relative Lack of Publicity and Its Funding Status
We all know why there’s so much hype in the crypto space—money. It is still a highly speculative space, yet increasingly crowded, so those projects that can generate the most hype have the best chance of getting public funding.
RSK has operated without much publicity, and have admitted that PR and marketing is something they have to work on. With their team having been so focused on the technology side of things and working on launching the testnet and mainnet, marketing took a bit of a backseat.
Fortunately, RSK did not need any hype to thrive. Thanks to three private funding rounds in 2015, 2016, and 2018, RSK has managed to raise an impressive war chest of 22,000 BTC for its long-term funding needs, enough for five to ten years.
BTOs: Bitcoin-backed Token Offerings on RSK
Ethereum has become almost synonymous with ICOs. For RSK, its equivalent will be BTOs, or Bitcoin-backed Token Offerings. Under the BTO model, the startups will receive their funds directly in BTC while enjoying the same security as the Bitcoin network itself. RRC20 tokens (like ERC20 tokens but for RSK) are also fully compatible with web3, Metamask, Truffle, Trezor, Ledger, MyCrypto, MyEtherWallet, and such.
A few stablecoins, including MoneyonChain and other major names which cannot be disclosed, will be doing their BTOs on RSK. Other upcoming projects include dexFreight, a decentralized logistics platform; TEMCO, a supply chain solution; Bene-Fit, a healthcare solution and Koibanx, a blockchain solutions company for businesses and governments. This is in addition to several Latin American-based projects also in the pipeline.
How RSK Intends to Address Long-Term Scalability Challenges
Everyone with even a cursory familiarity with crypto and blockchain understands that scalability is one of the major hurdles holding back mass adoption. Bitcoin currently can only handle about 7 transactions per second—RSK aims to reach 400 with a blocktime of about 10 to 14 seconds in the near future.
Of course, scalability is a challenge which RSK is still hard at work on. They are currently banking on Lumino, their third-level layer, since it will be connected to both the Bitcoin network and the Lightning Network. The latter use case is very new, and involves buying RBTC directly using Lightning Bitcoin through something called supercavitation swaps. This use case won a recent hackathon held in Chiang Mai, Thailand.
Other than Lumino, RSK is actively exploring all possible solutions to the scalability challenge, both from a transaction speed and blockchain size-reduction perspective. Things like the Lumino Compression Transaction Protocol (LCTP), shrinking chains and storage rent, which allow different contracts at different prices depending on availability, are all on the menu. At present, RSK’s average blocktime is about 34 seconds. Once Lumino launches and they see the blocks getting full, only then will they focus on reducing blocktime.
How Living in Latin America Shaped RSK’s Vision on the Potential of Crypto
For people who’ve never lived in truly unstable economies, it’s understandable that many get into crypto for more speculative purposes. Crypto volatility is a real thing, and far exceeds that of most currencies. So, it’s understandable the value proposition of crypto for people in those economies trends toward the more speculative side.
Not so for people who live in places like Argentina and Venezuela, both of which have a history of hyperinflation. Venezuela is currently in chaos, with a 830,000% and rising inflation rate. And although Argentina’s hyperinflation days are in the past, its inflation rate has hit over 40% in the past five years alone. Back in 2002, the government also froze savings accounts to stave off a bankruptcy crisis.
Living in such economies, the value proposition of Bitcoin and cryptocurrencies becomes crystal clear—they are a store of value. As Gabriel eloquently put it, “The value of money dissolves in your hands”. No one wants to save for the long-term in the local currency, leaving then scant options other than real estate, which is accessible to only a privileged few. Despite the various bull and bear cycles in cryptocurrency, its power as a store of value remains undiminished in the region and the ecosystem has kept growing non-stop since Satoshi’s genesis block.
It is not just the ordinary citizens who see the value in cryptocurrencies—the governments, particularly in Argentina, do so as well. Whether their motives are cynical or noble, they realize they need to do something to reduce the massive inequality in the region and are thus open to it.
Non-Profit Cryptocurrency Educational Initiatives for Grassroots Support
The RSK team passionately believes that crypto and blockchain should be a grassroots bottom-up movement. This is why some of its founders with other members of the Latam community have founded La Bitcoineta, a non-profit initiative to educate the masses about crypto’s potential. It is a basically a van loaded with Bitcoin memorabilia, driving to the less urban areas educating the populace. Thus far, the van has travelled over 20,000km.
The RSK team is also seriously considering bringing a similar initiative to Asia, and has discussed this with Coingecko. Speaking of Asia, RSK is planning on setting up a permanent team in the region.
RSK Intends to Deepen Its Relationship with the Asian Crypto Community
RSK believes that most of the relevant crypto use cases will come out of the emerging regions of Latin America, Asia, and Africa. This tend to be the more unstable regions, and as explained earlier, provide a higher level of natural impetus for cryptos to flourish.
Having already made the visit to Malaysia in late 2018, RSK plans to make further visits this year. They are very impressed with the passion and skill of the Asian crypto community and thus plan to set up a permanent team (a support team and perhaps a development team as well), given the distance between the two continents.
Other than this team, RSK also plans to organize hackathons in the region and get more Asians involved in its RSK Ambassadors program. RSK already has a network of 150 RSK-certified ambassadors around the world advising local projects how to run projects on RSK. Most ambassadors are long-term Bitcoiners with good development skills, so if you fit the profile, definitely check the program out.
RSK’s Final Takeaway Message for CoinGecko Readers
RSK are strong believers in the potential of crypto and blockchain to create the future internet of value. You can reach out to them anytime for help or support.
Together with other friends around the world, they have also created a non-profit project called Blockchain for Humanity, which focuses on selecting blockchain use cases which may have the most potential social impact. Thus, if any of you have ideas on using blockchain for things like increasing financial inclusion, transparent donations, or decentralized IDs, please reach out to RSK. These use cases don’t necessarily have to be on RSK; blockchain technology is agnostic after all, and community participation is what will drive the whole experiment forward.
Links and Resources
Ian Lee is a freelance writer specializing in the areas of finance and all things crypto. He also has over five years of experience in investment banking. Follow him at Ian Lee.