Smart Contracts soon followed, making it possible for people to carry out transactions without a third party by taking advantage of the newfound blockchain. Smart contracts made decentralization possible since no centralized body was needed to handle transactions.
When DeFi first took off, it happened on the Ethereum network. That is because most DApps (decentralized applications) require a lot of complex rules that can’t be coded directly on Bitcoin.
The Bitcoin network was ideal for building DeFi as it was (and still is) the biggest and most adopted network. However, there was the fundamental limitation of adding the code to the network until RSK.
RSK (Rootstock) is the first smart contract platform built on the Bitcoin network and is the safest smart contract platform secured by the Bitcoin Network.
What exactly does that mean? And what is the RSK network?
This article will cover all you need to know to understand RSK and its native token RBTC.
What are Smart Contracts?
Smart contracts are executed by a computing network; therefore, they are self-executing. That is, they will run when the predetermined conditions are met.
For example, say you lend some money with your collateral as your crypto assets stated in the smart contract. If you pre-determined 6 months as the specified period to return the money and you don’t. The smart contract will automatically run and liquidate your assets after 6 months.
Smart contracts allow you to carry out financial transactions with anyone without a third party. They can be fully autonomous if all the objects referred have a digital representation on the platform.
In cases where there is no digital representation, the smart contract can refer to itself and provide external information to the blockchain.
Here are some transactions you can use smart contracts for:
- Assets Tokenization
- Escrow services
- Machine to machine payment
- Decentralized exchanges
What Is RSK?
The RSK protocol is a layer 2 sidechain built on the Bitcoin blockchain that allows smart contract functionality to be added to the Bitcoin ecosystem. A Bitcoin sidechain is a separate blockchain that runs parallel to the Bitcoin network and operates independently.
The most unique property of the RSK network is that it uses the most secure blockchain – Bitcoin – to secure its smart contracts through the process ofmerged mining. Miners who merge mine with RSK are rewardedin RBTC- read on to learn more about merged mining and RBTC.
How the RSK Platform Works
RSK shares a lot of key concepts with Ethereum. Some of these features/concepts include:
- Virtual machine (VM)
- Web3 interface
- The account format
- Pay per execution (Transaction “gas”)
Furthermore, miners use the mining algorithm SHA-256, a merged/combined mining with the Bitcoin network. Merged mining allows two blockchains (Bitcoin and RSK) with the same consensus and hash function to be mined together without loss of performance and with a high level of security.
40% to 60% of Bitcoin miners engage in merge-mining with RSK.
The RSK protocol is a combination of the following:
- A two way-pegged Bitcoin sidechain
- A Turing-complete deterministic RSK Virtual Machine (RVM) for smart contracts
- A dynamic hybrid merged-mining
- A low-latency network
- Turing-Complete Virtual Machine
Without the RSK Virtual machine (RVM), the RSK protocol may not work properly; it is at the heart of the smart contract operations. The RVM, through the use of the Turing Complete Platform, allows smart contracts and DApps to be executed without any problem.
The RVM op-code level is compatible with Ethereum’s Virtual Machine (EVM), and it can run Ethereum smart contracts flawlessly. That way, The RVM provides Ethereum users with the opportunity to run their projects on the Bitcoin network.
- A Two Way-Pegged Bitcoin Sidechain
The RSK protocol is a two way-pegged bitcoin sidechain; BTC and RBTC can be converted between the blockchains.
What is the PoWpeg?
The PoWpeg is a multi-signature management system that uses a combination of HSMS (Hardware ) and SPVs. It is a new security and is layered on the previous federation to provide additional security and decentralization.
Also, PoWpeg is one of the most secured peg-based on the multi-signature (multi-sig) system.The PoWpeg doesn’t have control or direct access to your private key.
What Is RBTC?
RBTC (Smart Bitcoin) is the native token of the RSK network. You’ll use RBTC to pay a gas fee for smart contract execution on the RSK network, just as ETH is used as gas on the Ethereum network. You can also use the RBTC purely for trading and investment purposes.
The RBTC is pegged 1:1 to BTC (1 BTC equals 1 RBTC).
In practice, when you exchange BTC for RBTC, no currency is “transferred” between the blockchains. Instead, you transfer BTCA; that amount of BTC is locked on the Bitcoin Blockchain and is unlocked as RBTC on the RSK network. When you need to move RBTC back to BTC, that amount is locked on the RSK network and unlocked on Bitcoin.
How RSK impacts BTC
The RSK protocol was built to allow the creation and implementation of smart contracts in a decentralized way. In simple terms, the RSK protocol exists as a tool for using Bitcoin as DeFi. Here are sme of the ways the RSK network improves on Bitcoin:
- With the GHOST protocol, the RSK chain can validate transactions and extract blocks faster than the Bitcoin network. This feature helps to increase confirmation of Bitcoin.
- The RVM allows the Bitcoin Blockchain to run smart contracts.
- Protects the Network from Selfish-mining with the use of the DECOR+ protocol.
- Merged mining to help protect Bitcoin miners’ investment
RSK aims to add more functionalities and values to the Bitcoin ecosystem through smart contracts, higher scalability, and near-instant payment.
Is the RSK Ecosystem a Threat to Ethereum?
No. RSK is important to Ethereum users and developers. Although RSK has several efficiencies over the Ethereum network, it was built to be compatible with Ethereum.
Think of them as two compatible controllers for the same game console, each built for different games and by different engineering teams.
Many wallets and Dapps on the RSK ecosystem support Ethereum aswell.
The RSK protocol can also help the Ethereum Blockchain in the following ways:
- Increase Dapps Users Base by deploying seamlessly compatible Dapps on both Ethereum and RSK.
- Increase transaction Throughput on Ethereum by porting some DApps to RSK
- Foster the standardization of EVM/Web3 by providing unifying learning materials.