RSK Imagines ‘Decentralized Finance Systems’ Coming to Bitcoin

With its latest partnership, the Rootstock (RSK) platform is taking a crack at decentralized cloud storage, a move in line with its ambitions to bring DApps to the fore of the internet’s core infrastructure and services.

Last week, the Bitcoin sidechain project announced its recently struck-up relationship with the Ethereum-facing Swarm platform to develop an encrypted, decentralized storage system (something akin to IPFS or Sia). Under the partnership, RSK will implement Swarm into its existing platform while building the transaction settlement and accounting infrastructure to migrate this service to Bitcoin and other blockchains.

RSK, formerly spelled out as Rootstock, is a smart-contract compatible Bitcoin sidechain. The network operates much like Blockstream’s sidechain, Liquid, wherein users can go through a federation of node operators to peg their bitcoin to a token representing this bitcoin on the sidechain. In RSK’s framework, these tokens, dubbed smart bitcoin (RBTC), power the network and allow users to leverage its services.

These services include minting RIF, an ERC-20 compatible token built on RSK that the company envisions serving as a bridge between not just Bitcoin and Ethereum, but Bitcoin and any other blockchain. RBTC acts as a native coin for the RSK network and for its endogenous smart contracts. RIF, however, will be used to execute smart contracts on an upper layer of infrastructure that provides decentralized financial services across blockchains.

Bringing Decentralized Storage to Bitcoin

This upper layer is where Swarm’s technology fits into the equation. The RIF OS roadmap includes creating a suite of DApps for decentralized identity, oracling services and communication, among others. It also wants to tackle decentralized storage, an endeavor this new partnership is meant to accelerate. 

“Our vision is to create an open marketplace for decentralized infrastructure and services, so this is the first step toward integrating other protocols into the RIF OS,” Diego Gutierrez-Zaldivar told Bitcoin Magazine at Bitcoin 2019 in San Francisco.

With the partnership, RSK will integrate Swarm’s encrypted storage services into RIF OS’s framework. The protocol encrypts and shards user data, disseminating it across the various hard drive spaces within a network of storage providers. Providers will stake RIF tokens as collateral for each storage contract to ensure that they don’t misuse user data, though providers cannot decipher this encrypted information without the sum of its parts. (And since the data is redundant across the network’s many storage providers, lost or corrupted data won’t jeopardize a user’s stored information.)

RSK’s RBTC will serve as the primary currency for settling accounts and payments for the storage protocol.

As Gutierrez-Zaldivar told Bitcoin Magazine, Swarm’s storage service is one of the first features of what RSK promises will be a fully decentralized finance system. The storage system would allow developers to keep encrypted libraries for developing tools and streaming information. It would also house digital identity information in an encrypted and privacy-preserving manner.

This ID scheme would be the center of a decentralized, digital economy, Gutierrez-Zaldivar said. It would make user and developer identities and reputations portable across any service that migrates on to RSK’s network. 

“All your RIF identity information will be yours, so you can choose to engage in other sharing economies. Your reputation grows as you interact with them,” he said.

Building Bridges Between Bitcoin and Other Blockchains

Gutierrez-Zaldivar’s explanation portrayed RSK as a hub for all the decentralized financial services Ethereum promises — one that offers Bitcoin as the base layer for value with the ability to interoperate with tokens and smart contracts on other platforms. Each time RSK rolls out a service like the storage protocol, a library of code will be stored for developers to reference and interact with. Between this repository of smart contract tools and the identity scheme underpinning interactions on the network, RSK could function as an apparatus that bridges Bitcoin and other blockchains, Gutierrez-Zaldivar explained.

“We view it as Bitcoin as a store of value, that’s the base layer, and it always will be. And on top of that you have RSK as the business logic layer.”

Right now, this layer only features RIF’s decentralized ID service and RBTC payments. RSK is developing its own brand of the Lightning Network, Lumino, to scale payments, something that it hopes to interoperate with the Lightning Network in the future.

It also wants to tackle data oracle services for smart contracts, encrypted chat services and stablecoin issuance, among a host of other decentralized financial services — ambitious goals to say the least. RSK will make its first step toward turning them into reality with its launch of this encrypted storage protocol in Q3 of 2019.

The post RSK Imagines ‘Decentralized Finance Systems’ Coming to Bitcoin appeared first on Bitcoin Magazine.

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