The vision for Bitcoin's future is often compared to gold or the dollar. However, for Bitcoin to become widely adopted as a method of payment, several challenges must be overcome, including network performance and functional completeness. One project aiming to address these challenges is RSK (Rootstock), a Bitcoin sidechain that brings smart contract functionality and improved scalability to the Bitcoin network.
Nick Szabo, one of the earliest proponents of smart contracts, has described RSK as combining "the most valuable part of Bitcoin (money and settlement system) with the most valuable part of Ethereum (the smart contract programming environment)."
What is RSK?
RSK, launched in 2016, is a sidechain that is two-way pegged to the Bitcoin blockchain. It enables Bitcoin miners to earn additional rewards through merged mining, creating a supportive network that offers smart contracts and higher performance. The core innovation that allows this connection is the two-way peg.
Understanding the Two-Way Peg
A two-way peg allows BTC to be transferred from the Bitcoin blockchain to RSK and vice versa. It is crucial to understand that the BTC on the Bitcoin blockchain isn't actually "moved." Instead, it is temporarily locked by a third party on the Bitcoin blockchain, while an equivalent amount of SmartBTC (SBTC) is released on the RSK chain. SBTC is not a new token; it is directly pegged to BTC at a 1:1 ratio and cannot fluctuate independently. Therefore, the RSK network does not impact the intrinsic value of Bitcoin itself.
This process requires a federated group of third parties to vote on when to unlock the Bitcoin and where to send it. This raises an important question: how do we ensure these third parties act honestly?
RSK's Security Model: A Hybrid Approach
RSK employs a hybrid security model that combines elements of drivechains, federations, and sidechains.
On the Bitcoin blockchain side, RSK primarily uses a federation of notaries (utilizing multi-signature technology) to decide which Bitcoin to unlock. This federation, which consists of over 40 members, includes major Bitcoin companies with high technical and security standards, such as Bitmain. The federation is community-governed and can add or remove members through an online voting system, ensuring a degree of decentralization and autonomy.
The long-term goal involves transitioning to a drivechain model, where the power to manage the locked Bitcoin is handed over to Bitcoin miners themselves. As more honest miners participate, the security of the network increases. However, Diego Gutierrez Zaldivar, CEO and co-founder of RSK, explains that in the early stages, with too few Bitcoin miners participating, a drivechain would not be sufficiently decentralized or secure. RSK's plan is to abolish the federation model once over 90% of miners are engaged in merged mining, effectively giving the voting power to the miners.
The Role of Merged Mining
The RSK chain is secured through merged mining. This allows Bitcoin miners to contribute their hashing power to secure the sidechain while they mine BTC, earning additional transaction fees without compromising their Bitcoin mining performance. This "two-for-one" mining mechanism is possible because RSK uses the same hashing algorithm as Bitcoin. Miners only need to make a simple adjustment to their mining software. According to Diego, this software adjustment has already been adopted by 85% of Bitcoin miners.
RSK vs. Ethereum: A Comparative Look
In terms of functionality, RSK aims to build a Turing-complete smart contract platform similar to Ethereum. Its goal is to make the functionally simple Bitcoin blockchain programmable, enabling a wide range of financial and other applications to offer services directly within the Bitcoin ecosystem. Here’s how RSK compares to Ethereum:
- Ease of Use and Developer Adoption: RSK's smart contracts use Solidity, the same programming language used by Ethereum. This makes RSK backward compatible with the Ethereum platform, allowing Dapp developers to port their projects to RSK with minimal effort or cost. Diego states that over 50 development teams worldwide are already building Dapps on RSK, including some national regulatory bodies and central banks.
- Higher Throughput and Faster Processing: Network congestion has been a significant hurdle for Ethereum. RSK tackles this with its original transaction compression technology, which allows for a greater number of transactions to be processed in the same block space while also reducing verification times. Currently, RSK can handle 100 transactions per second (TPS), a throughput comparable to PayPal and the Bitcoin Lightning Network, while maintaining low transaction fees of around 3.5 cents.
- Leveraging the Bitcoin Ecosystem: Bitcoin is the largest cryptocurrency by market capitalization. It boasts a massive network of miners, immense trading volume, and a robust security model. Building an ecosystem on top of Bitcoin provides inherent stability, demand, and significant growth potential that newer platforms struggle to match.
For developers looking to build on such scalable infrastructure, it's beneficial to 👉 explore advanced blockchain development platforms that provide the necessary tools and environment.
The Roadmap and Future Goals
RSK has followed a steady development path. It released its first smart contract testnet, Turmeric, in 2016. This was followed by the announcement of the Lumino scalability solution in February 2017, the Ginger testnet in May of that year, and a mainnet beta test at the beginning of this year.
Diego outlined the team's next objectives, which include researching and developing data storage solutions to support even greater network performance. The ultimate goal for RSK is to achieve a throughput of 2,000 transactions per second. "This would make it possible to use Bitcoin as a payment tool for everyday situations, like buying coffee or any other small transaction," he said. Additionally, RSK is seeking to implement more efficient payment processing solutions, such as off-chain transaction channels.
The project has secured $4.5 million in total funding across two rounds from investors, including Bitmain. The RSK team possesses deep expertise in blockchain and software development. Prior to RSK, Chief Scientist Sergio Demian Lerner founded Coinspect, a company focused on cryptocurrency security, and CoinFabrik, a software factory for cryptocurrency development. CEO Diego Gutierrez Zaldivar has extensive experience in fintech product development and previously founded the financial lending company Koibanx.
Frequently Asked Questions
What is a Bitcoin sidechain?
A Bitcoin sidechain is a separate blockchain that runs parallel to the main Bitcoin blockchain. It is connected via a two-way peg, allowing assets (BTC) to be moved between the main chain and the sidechain. This enables the sidechain to experiment with new features, like smart contracts, without affecting the main Bitcoin network.
How does RSK improve Bitcoin's scalability?
RSK improves scalability through two main methods: merged mining, which leverages Bitcoin's existing hash power for security, and transaction compression technology. This technology allows RSK to process more transactions in each block, significantly increasing the number of transactions per second the network can handle compared to the base Bitcoin layer.
Is SBTC a separate cryptocurrency?
No, SmartBTC (SBTC) is not a separate cryptocurrency. It is a representation of Bitcoin on the RSK sidechain that is pegged 1:1 to BTC. When you transfer BTC to RSK, it is locked on the main chain, and an equivalent amount of SBTC is created on RSK. This process is reversed when moving assets back.
What is merged mining?
Merged mining allows miners to simultaneously mine two different cryptocurrencies that use the same hashing algorithm without a significant loss of performance. Bitcoin miners can mine both BTC and RSK blocks at the same time, earning rewards from both networks for their computational work.
How decentralized is the RSK federation?
The RSK federation is currently a group of over 40 trusted entities. While it is more centralized than a pure proof-of-work model, it is designed as a temporary solution. The long-term plan is to transition to a model where Bitcoin miners directly control the peg, achieving a much higher degree of decentralization.
When can Bitcoin become a viable financial infrastructure?
According to RSK's analysis, Bitcoin could become a foundational financial infrastructure when its network can process up to 30,000 transactions per second with transaction fees consistently below one cent. Achieving this requires significant scaling solutions like those pioneered by sidechains and layer-2 protocols.