Rootstock: Bitcoin-powered smart contracts

Rootchain Platform - Bitcoin-driven Smart Contract White Paper (9th Edition)

Date: November 19, 2015

By Sergio DemianLerner

Translator: Huang Shiliang

Table of contents

introduction

Why is the root chain an important part of the Bitcoin economic ecosystem?

Stakeholders and value protection in the Bitcoin economy

Governance Model

Protecting Bitcoin Miners’ Investments

Bitcoin/root chain two-way anchoring mechanism

Lower Bitcoin transaction fees and stable value asset release

Strengthening Bitcoin Security

Rootchain is a low-transaction Bitcoin payment network

Rootchain Use Cases

Micropayment channels and hub-and-spoke networks

Peer-to-peer distributed exchange

Retail Payment Systems

Hosting Services

Creating digital encrypted assets

Asset Securitization

Decentralized Remittance

IP Registration and Protection

Voting System

Micro loan system

Traceable supply chain

Online Reputation and Digital Identity

Global Online Gaming Currency

Internet Gambling and Market Forecasts

Fair Game

Technical Overview

Turing-complete virtual machine

Sidechain

50% third-party trusted side chain

Dynamic Hybrid Joint Mining

Fast payments and low latency network

Root Chain Technical Features Bitcoin

Instant Payments Technology Preview

Decoration + Protocol

Block Transfer Protocol

Double Memory Block Transfer (2SBP)

Push Missing Transport (PMT)

Delayed Transmission Transaction Trial (DTI)

Block Header First Propagation (IBHP)

Dual Priority Stream Connection Protocol (2PSC)

Zero Confirmation Block Mining Trial (MUB)

Local Route Optimization (LRO)

Bitcoin mining network resources further optimized

Real network topology

Proof of Work Function Verification Time

Client network protocol stack

Block cost

simulation

Secure Joint Mining

Privacy of transactions

Safety

Scalability

Probabilistic Verification and Fraud Proofs

in conclusion

introduction

In 2008, Satoshi Nakamoto created the revolutionary payment system Bitcoin. Bitcoin includes a limited-function "smart contract" design, a concept proposed by Nick Szabo in 1993.

Since then, there has been a great deal of research into creating new cryptocurrencies that support Turing-complete distributed programs. There is now a widely-held, practical, secure, and deterministic virtual machine that can achieve this goal.

We believe new applications are necessary to make Bitcoin the world's leading digital cryptocurrency, and adding smart contract functionality is key to achieving this goal. Even this realization we designed Rootchain, a Turing-complete smart contract platform based on Bitcoin. We also added other features that enhance the Bitcoin network, such as faster transaction transmission and better scalability, which we believe will be used to create new application scenarios.

Rootchain is an evolution of QixCoin, a Turing-complete cryptocurrency designed by the same team in 2013. Rootchain can provide an improved instant payment experience. It can currently process 300 tps of transactions, with most transactions confirmed within 20 seconds. And this is based on the security guarantee of Bitcoin and supports the SHA-256D joint mining algorithm.

Rootchain is a sidechain of Bitcoin. When Bitcoin is transferred to the rootchain blockchain, these Bitcoins will become "root coins" (RTC). Root coins are equivalent to Bitcoins that live on the rootchain blockchain, and they can be transferred back to the Bitcoin blockchain at any time without adding additional transaction fees (except for the transfer transaction fees of the rootchain). Root coins are the tokens of the rootchain sidechain, used to pay transfer fees to miners and contract processing fees. Root coins do not create new digital currencies: all root coins are converted from Bitcoins in the Bitcoin blockchain.

The root chain strengthens the following features of Bitcoin:

1. A Turing-complete Rootchain Virtual Machine (RVM) that allows for the creation of smart contracts.

2. The first transaction confirmation time is reduced to an average of 10 seconds.

3. A secure joint proof-of-work mining mechanism based on a joint threshold signature scheme.

4. Embedded low-latency fast relay backbone network to peer-to-peer gossip network.

5. Two-way anchoring using sidechains (currently a joint anchoring, fully automated anchoring of the Bitcoin protocol)

Note: "RSK" refers to the Rootchain platform, specifically the "RSK protocol" (specification) and the "RSK reference node" (reference implementation). The native RSK currency is the "Root Coin" and "RTC" is the symbol for the Root Coin, just like "BTC" refers to Bitcoin as a currency and "Bitcoin" refers to the Bitcoin protocol.

Why is the root chain an important part of the Bitcoin economic ecosystem?

Stakeholders and value protection in the Bitcoin economy

The primary goal of the Rootchain platform is to reward the main stakeholders of Bitcoin, which is the same as the purpose of the current Bitcoin system.

This concept is directly reflected in the core architecture of the root chain. In the Bitcoin system, miners use proof of work (POW) to provide computing power to verify blocks, and major industry companies (exchanges, wallet providers, and payment processing providers) form a class of community members to undertake integration work such as creating and verifying checkpoints, and signing redemption transactions using double pegs.

There is an improved voting system on top of the Rootchain platform, with miners, industry leaders, Bitcoin/Rootchain holders and core developers making the final decision.

In the following paragraphs, we describe how this incentive mechanism works.

Governance Model

Each role in the community has specialized technologies to provide the best service to the community: exchanges and web wallets provide secure Bitcoin storage, miners are responsible for large-scale mining to ensure users' safe transactions, blockchain companies create new applications to make dreams a reality, core developers provide professional technology to meet technical challenges, node maintainers provide infrastructure and network connections, and finally users are the core of the entire system, providing trust and liquidity.

The governance model of the root chain is to establish a community member representative system and set up five board seats. Miners use computing power to have voting rights (1 vote), Bitcoin and root chain users use proof of stake (POS) to have voting rights (1 vote), exchanges and web wallets jointly have voting rights (1 vote), Bitcoin and root chain core developers will have a special channel to exercise voting rights (1 vote), and finally there is one vote for non-profit organizations in the Bitcoin community, such as the Bitcoin Foundation, so that it can represent a wider economic ecosystem. Even the Ethereum Foundation can have public voting rights to represent Ethereum community members.

Protecting Bitcoin Miners’ Investments

In August 2016 (actually completed in July), due to the block reward reduction from 25 BTC to 12.5 BTC, the profit margin of Bitcoin merchants will drop to less than 50%. Millions of Bitcoin mining hardware will become obsolete in an instant. At the same time, since the second generation of chips (faster computing speed and lower energy consumption) will be developed and sold before 2017, and this may cover all mining machine markets today, almost all Bitcoin merchants who have not replaced their hardware will see the end of their business. With the use of joint mining technology, the root chain can bring miners the benefits of two currencies, and the incremental marginal cost is zero. This will bring opportunities for these Bitcoin miners to continue to obtain business for at least four more years. As long as the additional income provided by the root chain can compensate for the income gap after the halving, these old Bitcoin miners can still continue mining.

Since halving will reduce miners’ income, it may lead to the concentration of computing power in the hands of miners with lower mining costs, which will make the Bitcoin network more vulnerable. From this perspective, the root chain platform can provide miners with additional income and play a key role in protecting the security and value of Bitcoin.

At the same time, applications can be created at low cost on the root chain platform. Miners can not only guarantee their income, but can even develop new business opportunities.

Secure Bitcoin/root chain two-way peg mechanism

Leading companies in the Bitcoin industry will form a consortium to play a fundamental role in the secure transfer of funds between the Bitcoin and Root blockchains. These companies will also receive fees for processing the inflow and outflow of funds between the two blockchains.

Lower Bitcoin transaction fees and stable value asset release

Current Bitcoin holders and potential users have seen that the volatility of Bitcoin prices limits certain applications of Bitcoin (such as investment, global payment network). It is foreseeable that after the block reward is halved, further increases in Bitcoin transfer transaction fees will further limit the application of Bitcoin.

The root chain will provide a solution that allows transaction transfers to be completed almost instantly (20 seconds), and digital assets can be issued by anchoring the value of a specific currency and anchoring specific commodities. Bitcoin will play the role of a reserve currency, thereby reducing the price volatility of Bitcoin during use, which will make Bitcoin more valuable.

Strengthening Bitcoin Security

When the next Bitcoin block halving occurs (it has already happened. - Translator's note) millions of dollars of mining equipment will be sold at low prices, either privately or publicly online. This may lead to someone being able to buy a large number of mining machines at a very low price to form a computing power to launch a 51% attack. Because of security concerns, this may affect the price of Bitcoin. Through the form of joint mining, miners can obtain block rewards from both Bitcoin and the root chain, which may prevent the computing power of the Bitcoin network from declining.