First of all, before discussing this topic, it's important to understand one thing: what has allowed BTC and blockchain to develop to this point? Besides consensus, it is more about relying on decentralized technological innovation, allowing people to see the future's major development direction and trends, and it is definitely not solely dependent on speculation.
Of course, the market trend can also be influenced by external factors, such as global wars, the U.S. elections, financial crises, etc. However, it is more important to analyze the changes that blockchain technology brings to the world from a technical perspective. So, from a technical point of view, why does the emergence of Nervos CKB enable the rapid development of BTCFi? Recently, I have reviewed many analytical articles written by technical experts and industry leaders. They are actually quite reasonable, but it is difficult for ordinary people to delve into the technical aspects. Therefore, this article aims to explain the benefits brought by CKB from the perspective of an ordinary person, hoping to provide some insights!
I. What is Nervos CKB?
Nervos CKB (Common Knowledge Base) is an open blockchain platform designed to provide functionalities that surpass traditional Layer 2 solutions. By introducing advanced technologies such as the RGB++ protocol and Lightning Network integration, the CKB platform aims to solve network congestion issues and improve transaction efficiency, making the Bitcoin network more suitable for the needs of the global financial system.
CKB has adopted the same well-tested PoW consensus mechanism as Bitcoin from the beginning, maximizing security and decentralization. The mining algorithm of CKB is independently developed Eaglesong. After April 2020, CKB smoothly transitioned to ASIC mining, overcoming the most dangerous moment of the PoW chain. Currently, the mining machines for CKB are produced by Bitmain, the world's largest ASIC miner manufacturer. The current total network hash rate of CKB is about 158 PH/s, successfully experiencing the first halving of mining output in November last year.
II. Positioning and Advantages of Nervos CKB
CKB (Nervos Network) was initially launched in 2019 using a PoW+UTXO model and has now transitioned to a Layer 2 solution that is isomorphic to Bitcoin. CKB has accumulated rich experience in security, programming capabilities, and ecological development.
1. Team and Financing
The CKB development team consists of professionals from the global blockchain field. Chief Architect Jan Xie has contributed to the Ethereum clients Ruby-ethereum and pyethereum and collaborated with Vitalik Buterin to develop Casper and sharding technology. In 2018, the project completed a $28 million financing round, with major investors including Polychain Capital and Sequoia China.
2. Technology and Features
The RGB extension protocol launched by CKB combines Bitcoin's UTXO with CKB's Cell model to solve the data island problem. The RGB++ protocol allows for the issuance of new assets on the Bitcoin layer and possesses Turing completeness. Unlike other sidechains, CKB's technical characteristics ensure security and effectiveness.
（1）RGB++ Protocol — Building Bridges to Free Asset Flow: In the BTCFi ecosystem, the RGB++ protocol opens up a new realm for the cross-chain free flow of Bitcoin assets. Imagine that through RGB++, assets can freely shuttle between different blockchains without intermediaries. This not only brings unprecedented convenience to asset issuers but also opens up new investment channels for investors. 🌉
（2）JoyID + Lightning Network — A New Era of Fast Payments: By integrating the Lightning Network, the JoyID wallet injects new vitality into Bitcoin payments. Now, whether it's for international remittances or buying a cup of coffee, all transactions can be completed in seconds, safe and convenient. ⚡️
（3）Fiber Network — Building the Financial Highway of the Future: This new network not only enhances the liquidity and scalability of the entire ecosystem but also ensures high speed and stability of financial operations by strengthening the connections between chains. Imagine that in this network, every transaction and flow of funds is as swift as the speed of light.
3. Ecosystem
CKB is leading in ecological construction compared to other Bitcoin sidechain solutions:
（1）Wallet Products
The JoyID wallet supports multiple chains, allowing users to access CKB applications directly through Bitcoin addresses.
（2）DID Products
Supporting multi-chain DID projects with richer functions, has completed Series A financing.
（3）Inscription Protocol
The Omiga protocol provides users with a fair and efficient token minting and management experience.
III. Market Potential and Strategy of Nervos CKB
Currently, Bitcoin's second-layer solutions (L2) are growing rapidly, with various projects such as BounceBit, Merlin Chain, and B^2 accumulating considerable total locked value (TVL). In the face of this explosive growth, how does RGB++ penetrate this market? The key lies in its unique market positioning and strategic deployment. RGB++ not only exists as a protocol for issuing NFTs and FTs but also fully utilizes CKB chain's technological advantages to provide a seamless trading experience. Although operating on the Bitcoin mainnet may face higher gas fees and slower transaction speeds, the RGB++ protocol optimizes these operations by directly utilizing CKB's Dex for asset trading.
On the CKB Layer 2 chain, RGB++ focuses on the issuance of native assets and support for cross-chain assets. Bitcoin and Ethereum assets can be securely transferred to CKB using advanced bridging technology. We collaborate with several large institutions to ensure the security and reliability of transactions. Additionally, the assets we launch on CKB adhere to unified standards, such as FT standard XUDT and NFT standard, both of which have been applied on the mainnet. We also plan to launch specific trading platforms, such as the Omega Market, to support the issuance and trading of CKB native inscribed assets.
IV. Conclusion
Although RGB++ has obvious advantages in technology and market strategy, its development process has not been without challenges. The original RGB development was influenced by various factors, such as the need to build on the Lightning Network, but the existing Lightning Network standards do not fully support the RGB protocol. Additionally, the development tools and virtual machine (AluVM) for RGB also require time to improve, which may lead to slow development progress and missed market cycles.
Although CKB is not the earliest project in Bitcoin Layer 2, its unique technology and ecological potential provide ample room for future development. Bitcoin Layer 2 solutions are becoming the new favorites in the market. Especially the latest innovation of CKB (Nervos Network) — the RGB++ protocol, has attracted widespread attention. RGB++ not only propelled the value of CKB to soar through its innovative asset issuance mechanism early this year but also achieved an astonishing monthly increase of over 300% within just a few months. As the Bitcoin ecosystem continues to grow, the potential of CKB will become increasingly apparent. Through continuous innovation and technological iteration, we have reason to believe that the Bitcoin ecosystem will usher in a new explosion.
