Tomas Villalonga, a Bitcoiner from Argentina who lives in Australia, explains why the Bitcoin community should embrace Rootstock.
What I mean when I identify myself as a Bitcoiner is that there is no other asset as valuable and as important in the world. I understand the necessity of a global, immutable, uncensorable, unstoppable, open, decentralised and permissionless monetary network based on a Proof of Work system. I also understand that both the traditional finance and the broad crypto world can’t tackle the underlying issues with our economy. As such they fail to provide the solutions we humans need.
The simplicity in Bitcoin makes it possible to have a ledger that is untouchable from human corruption, and that has no quantifiable value, it’s literally priceless. Yet it does come with a cost, which can be reflected in the “Blockchain Trilemma” which states that a blockchain can only truly optimize for 2 out of 3 between decentralization, security and scalability.
This means that a decentralized and secure protocol has to be less scalable by default, there’s no way around this and Satoshi understood this. The solution was always to build scalability solutions on top of the most decentralized and secure network possible.
Scalability Solution 1: The Lightning Network
It was created to work around Bitcoin’s slow and costly transactions, and makes it possible to exchange BTC peer to peer almost instantly and nearly free of charge. All the while, not adding changes to the base layer.
This would allow Bitcoin to become a medium of exchange like no other, increasing the size of the network through its new use case, and bringing value back to its native asset. This attracts developers and investors alike to build more complicated applications and solutions Taking full advantage of the fastest growing and strongest monetary network the world has ever seen and making it even more valuable in a self reinforcing positive loop.
The incentives, ideology and technology of the Lightning Network align perfectly with Bitcoin, and as such it was fully embraced and celebrated by the community.
Scalability Solution 2: Smart Contracts
This case is a bit different. Rootstock is another solution to a different set of problems. Instead of tackling Bitcoin being slow and costly to transact, which we already solved with Lightning, the creators of this open source protocol seek to tackle another issue: its programmability.
This is harder to understand for the community at large, for a long time Bitcoin has been under constant attack by the Altcoins, due to the fact that you cannot have complex smart contracts running on it (like they do). This is by design, going back to the blockchain trilemma, Bitcoin had to sacrifice scalability to remain secure and decentralised.
The Altcoins embraced programmability as it was the only way to outcompete against Bitcoin in something, their networks could never dream of being as decentralised and as secure as Bitcoin. In doing so, they are growing more and more centralised over time, because they lack the underlying characteristics necessary to act as foundations for a successful financial system.
The problem is that during this Altcoin’s attacks and debates, the Bitcoin community started developing a strange defense strategy to confront them. Instead of arguing that a smart contract platform for decentralized applications (also known as DAPPS) cannot function properly without a sound money network based on Proof of Work optimized for security and decentralization. Without which, any complex system can’t be built on top. They instead argued that the very idea of a smart contract platform was ridiculous, and that no value can be generated with them. Which is not exactly true.
I think here is where we got on the wrong path. For even though most of the innovation that happened in the crypto space was grossly misused there were ideas worth exploring.
The Problems with Altcoins
Since then, every developer or project aiming to find a way to use the Bitcoin network as the base for smart contracts has been shunned by the community. This is really not good for the ecosystem, and is self sabotage that only slows Bitcoin adoption.
Developers are going to the Altcoin space, because there they are free to create, users follow them to access their creations. Where developers and users go, investors and money follow. Everything they are building cannot work, because of the base layer they stand on, and everything over time becomes a mockery of itself.
Instead of looking to solve real problems they turn into gambling casinos where most people lose their hard earned money and a few rich get richer. It doesn’t have to be this way. Rootstock created the first Ethereum compatible chain with merged mining that uses Bitcoin as its native currency. This is an incredible feat, but what does this truly mean?
Ethereum Compatibility
Rootstock uses the same virtual machine as Ethereum, the Ethereum Virtual Machine (EVM) and the same programming language, Solidity. For all the mistakes Ethereum did, it was very successful at one thing, creating a vibrant community of developers, who have been working in the same framework and the same language for years.
All that effort, experimentation and testing won’t be lost. They can easily port everything that they’ve been working on and deploy on Bitcoin. Taking advantage of its security, decentralisation and sound money policy. This is simply more efficient than creating a brand new language from scratch. It is both cheaper (since it is already built) and easier for developers to adopt. In a few words, it is more effective.
Merged Mining
This is the most important factor. Rootstock has its own blockchain, but it is connected deeply to Bitcoin. The Bitcoin miner can mine both chains simultaneously with practically no additional cost.
Firstly, Rootstock can inherit some of the security directly from the biggest and most powerful network in the world. Secondly, it means that the fees that take place on Rootstock are earned by the Bitcoin miners. This makes the main chain more profitable to mine, attracting more capital to be deployed to this activity, resulting in a stronger network.
Bitcoin as the Native Currency
Rootstock also decided, unlike Altcoins, not to issue its own token. That would have put it at odds with its base layer and ultimately wouldn’t have worked. Just like Lightning, it only needs Bitcoin to function.
But by using Bitcoin, they are connected to the greatest asset in the world. While also making sure that any value generated on the Rootstock chain accrues to BTC, increasing it as the protocol develops more use cases. In this way it is very similar to the Lightning Network, where it allows Bitcoin to do more than what it could do by itself, while at the same time making the underlying network better.
Which takes us to he most important point.
Use Case: Stablecoins
Here is where the rubber meets the road. Unlike Lightning, Rootstock has not been getting any love or attention from the community at large. I find myself trying to explain it to Bitcoiner friends and, so far, it has been an experience akin to hitting one’s head repeatedly against a brick wall. I firmly believe that the notion that smart contracts can’t provide meaningful value to people’s lives is objectively wrong. Allow me to explain my case with a concrete example.
I was born in Argentina and through the years I have seen my home country ravaged by ever growing inflation. The $10 pesos I used to need to eat lunch during my school days now are worthless, a water bottle today would cost you $150 pesos. The government, at the same time, makes it very hard to acquire dollars with their local currency, and black markets have steep mark ups that some people simply cannot afford.
The economy is in a very weak state which makes most of the people have just enough and live paycheck to paycheck. Bitcoin offers a separate system, one that governments cannot control, seize or stop. The problem is: Bitcoin itself remains a very volatile asset, for most people it is not possible to hold. Since they simply cannot afford a sudden drop in their purchasing power.
We are seeing a huge adoption of stablecoins in these places for this very reason. They’d ideally offer anyone in the world access to dollars in a permissionless and uncensorable way. However, all these have to run on Altcoin networks, and like we expressed earlier, these don’t work. The Stablecoins are also centralized and have massive risks that regular people are unaware of.
Yet, people flock to them, for even with all their flaws, they are still better than the fiat alternative. For their particular need, which is a larger and larger part of the world each day, stablecoins are even a better alternative than Bitcoin itself (as much as it pains me to admit it).
Here is where Rootstock can help.
A group of people in Argentina created Money on Chain, a protocol running on Rootstock for people to mint decentralized Bitcoin backed stablecoins. Which is a major step in the right direction in many ways:
- All the collateral is in the Blockchain, which can be audited at any time by anyone, 100% transparent and no one can take it.
- The collateral is Bitcoin, so it cannot be seized or censored.
- All the value generated by using this stablecoin accrues to Bitcoin and the Bitcoin network, increasing is defense budget and making it more secure as a result.
- It locks Bitcoin to serve as collateral, which increases scarcity for the asset driving the value up. More value attracts more attention as well, which would help Bitcoin grow.
- Takes people away from centralized stablecoins running on Altcoins, effectively making them obsolete.
- Increases the number of users on the network by bringing in those who need a stable asset and would otherwise not benefit from Bitcoin and POW to protect their wealth (as little as it may be).
- Develops the Bitcoin circular economy.
- People don’t have to leave the Bitcoin ecosystem to access Dollars, which reduces Bitcoins volatility.
- Makes people’s lives better, which also increases the network effect as more people seek this type of solutions.
- Connects the world to a free, open and global financial system.
- Accelerates hiperbitcoinisation by a large factor, which is saying: many people will benefit from Bitcoin faster and enjoy its benefits sooner. The positive ramifications of this are impossible to calculate.
Conclusion
As both a Bitcoiner and someone who understands the difficulties of living in tough economic situations, like we see all through Latin America and Africa, it saddens me how the community is not supporting what Rootstock is doing.
It is painfully clear to me that the benefits it provides, the positive impact it can have in an ever darkening world, is something we can’t afford to ignore. The opportunity cost is just way too high.
In essence, using Rootstock, helps the network grow, provides people with solutions to their problems, makes Bitcoin more secure, more decentralised and more valuable.
Please contact me if anything I’ve said was wrong, if you agree and/or not. I’love if we could all talk openly about this.
By email: [email protected]
By Twitter: https://twitter.com/TheArtOfTomas