Bitcoin is for everyone. This means that anyone can use the code, integrate new applications or suggest changes. Whether these are implemented depends on the users. Bitcoin POS, for example, failed because the market saw no use for it. It is different with the ordinals: For months, the Bitcoin NFTs have been causing controversial discussions and recently massive overloading in the blockchain. What is needed now? A compromise. The RGB protocol is supposed to make it possible.

RGB: Really Good for Bitcoin

Really good for bitcoin: that promises RGB. The protocol brings smart contracts to the blockchain. Similar to the Lightning Network (LN), RGB improves the scalability and transparency of the main layer. With the integration, for example, NFTs, utility tokens or DeFi applications on Bitcoin are possible. RGB is a similar framework for issuance and transfer of tokens as Ethereum’s ERC20 standard.

The RGB network works with a so-called client-side validation paradigm. All data is stored outside of the bitcoin transactions. This allows the system to operate on Lightning without requiring changes to the LN protocols.

As a security mechanism, RGB uses one-way seals defined over bitcoin transaction outputs (UTXO). By connecting to a UTXO it offers the possibility to validate the uniqueness of a contract status. Reviews are open and can be carried out by any party. In short: RGB uses Bitcoin for its security model and the definition of ownership and access rights for tokens, i.e. NFTs.

The solution to Bitcoin’s NFT problem?

This is what makes RGB one of the most promising solutions to the current ordinal problem. At least that’s what Gideon Nweze, founder and CEO of the new NFT marketplace DIBA thinks. Instead of ordinal inscriptions, he uses the RGB protocol. The big difference: Ordinals use the Bitcoin main network and massively overload the blockchain. The developer explained:

When I build a house, I don’t use all of the storage space in the foundation. I build the rooms and the storage room on top of that in layers. Ordinals are like trying to cram everything into the foundation, while smart contracts house everything on the floors above.

DIBA’s previously theoretical approach still has to prove itself in practice. However, the solution shows that Bitcoin and NFTs are very compatible with each other. Now the question remains whether users are willing to take this new path.

Not over the hill yet

It may be a while before the hype surrounding the Ordinals dies down. How Data from Dune Analytics prove, several thousand NFTs are still being added to the blockchain every day. This drives up transaction costs: At the time of writing costs a wire transfer averages $5. There is no doubt that Bitcoin faces a major challenge. If the fees remain at a high level, Orange Coin is increasingly being criticized by the competition.

However, Gideon Nweze is not alone in finding a solution with his NFT marketplace. Last week, Lightning Labs presented a Bitcoin update that should get the network load under control. Whether with the RGB protocol or through Lightning Labs solution: Bitcoin finds a way.