Gate.io Blog RGB Protocol Introduces Alternative Bitcoin NFTs with Ordinal Issuance

RGB Protocol Introduces Alternative Bitcoin NFTs with Ordinal Issuance

12 June 14:38

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![](https://gimg2.gateimg.com/image/article/1686551021RDZZ.jpeg)

## TL; DR

Users can mint Bitcoin NFTs using the RGB protocol which exists on the Bitcoin blockchain.

Bitcoin ordinals have helped to increase the popularity of NFTs.
The RGB Protocol is scalable, flexible and interoperable with the Lightning network and the Bitcoin blockchain.

## Introduction

The Bitcoin blockchain seems poised to maintain its top position in the crypto space as a result of  changes taking place on it. For a long time Bitcoin failed to have products that offer utility to its users.

However, the Taproot Upgrade has injected life into the blockchain as it has opened opportunities for innovations that create value for the crypto community. Today, we explore how the RGB Protocol has brought vibrancy to the Bitcoin ecosystem and the non-fungible token sector.

RGB Protocol Introduces Bitcoin NFT alternatives

The RGB protocol that exists on the Bitcoin blockchain enables individuals to create Bitcoin NFTs.  Users can [create the Bitcoin NFTs](https://www.gate.io/live/video/e64d7c85f00f5622119a922427f6b87c "create the Bitcoin NFTs") on Digital Bitcoin Art and Assets (DIBA), a nonfungible token (NFT) marketplace, which leverages RGB smart contracts.

Gideon Nweze, the CEO of Digital Bitcoin Art and Assets (DIBA), believes that RGB is a suitable protocol for creating alternative NFTs on the Bitcoin blockchain. According to him, using RGB to create NFTs does not impact the blockchain space and transaction fees, making it sustainable for the network.

As such, the RGB does not have similar problems as the Ordinance protocol has such as high transaction fees and congestion. Also, it does not lead to scalability issues since it functions off-chain.

Gideon Nweze believes that the ability of the RGB Protocol to mint Bitcoin NFTs is a significant milestone as the technology is compatible with the Bitcoin blockchain and will increase trading activities on the network.

![](https://gimg2.gateimg.com/image/article/1686552040RGB 1.png)
RGB Protocol to solve challenges the Bitcoin blockchain faces - Heraldsheets

DIBA, supported by Draper Associates, aims to bring Bitcoin utility to many people around the world as well as enabling trade in unique digital assets (UDAs) like art and music. DIBA will also promote BitMask, a crypto wallet that holds Bitcoin and the UDAs.

Nweze also contends that smart contracts like RGB protocol and Ordinals Protocol which enable the minting of NFTs may be viewed favourably by the U.S. Securities and Exchange Commission (SEC).  As a result, it becomes less likely to classify BTC as a crypto security at any time in the future.

## Growth in popularity of NFTs

Recent studies have shown growth of the NFT industry in recent years. For example, in [2022 Nansen, a blockchain analytics platform](https://www.nansen.ai/guides/nft-statistics-2022 "2022 Nansen, a blockchain analytics platform"), reported that 4% of the United States population own NFTs. This figure doubled in 2022 showing a growing interest in NFTs.

Nansen also gives the reason why that number is still low. It is because [70% of the American population](https://www.nansen.ai/guides/nft-statistics-2022 "70% of the American population") does not know about NFTs. Another [consumer survey carried out in Asia](https://www.statista.com/statistics/1311390/asia-intention-of-affluent-consumers-on-purchasing-nfts/ "consumer survey carried out in Asia") in 2022 shows that 12.3% of the participants purchased NFTs before and that 26% of them did not know about non-fungible tokens.

There are several reasons for the growing popularity of NFTs over the years. Basically, most NFTs have utility since they represent real world objects like art, videos and real estate which people can purchase online. The fact that they exist on the blockchain makes records of their transactions immutable and transparent.

Also, since they are built on the blockchain they are secure as they are less likely to be hacked as people use digital wallets rather than centralized servers to manage them.

The other reason why NFTs are very popular is their potential to generate much profit. This is because they are unique and cannot be replicated. examples of NFTs that fetched much on the market are The Merge by Pak, sold for $91.8 million, Beeple’s HUMAN ONE, sold for $28.9 million and Beeple’s 5000 days ($69.3milion), among others.

The launch of the Ordinals protocol where people have created many Ordinal In_script_ions has also increased the popularity of NFTs. Already; more than 9 million Bitcoin Ordinals have been created on the protocol, something that has also increased the utility of the Bitcoin blockchain.

Read also [how to buy Bitcoin Ordinals](https://www.gate.io/how-to-buy/ordinals-ordi "how to buy Bitcoin Ordinals")

![](https://gimg2.gateimg.com/image/article/1686551335RGB 2.png)

Total Bitcoin Ordinals - Duneanalytics

As <a href="/price/the-graph-grt" target="_blank" class="blog_inner_link">The Graph</a> shows, more than 10 million BTC ordinals have been created since 14 December 2022.

## Understanding the RGB Protocol

We have already talked about how users can mint Bitcoin NFTs with Ordinal issuance on the RGB network; let’s briefly discuss how the Really Good Bitcoin (RGB) protocol functions.

RGB Smart Contract Protocol, previously called BHB Network, was developed by Giacomo Zucco and first launched in 2016. It was, however, relaunched in 2019. It uses the Lightning Network functionality and enables users to mint NFTs without using much space on the Bitcoin network.

It operates like a layer-2 ecosystem since it manages the data of the smart contract and the code off-chain. This process of having smart contracts and their data executed off-chain is called the principle of client-side validation. In other words, everything to do with a certain smart contract stays with the relevant client.

Essentially, the different RGB-based smart contracts can communicate with each other. Another important point to note is that the RGB network can only mint NFTs but not BRC-20 tokens. However, the users can also create other tokens, stablecoins and  blockchain assets.

## Limitations of BTC language _script_

Bitcoin’s language _script_ is more limited than those of other blockchains like <a href="/price/ethereum-eth" target="_blank" class="blog_inner_link">Ethereum</a> and <a href="/price/solana-sol" target="_blank" class="blog_inner_link">Solana</a>. For example, Ethereum's Solidarity enables greater functionality on the blockchain than the Bitcoin language _script_. As a result, it is currently impossible to implement certain logic such as royalty distribution using smart contracts.

Bitcoin language _script_ limitations means that it is impossible for creators to establish smart contracts that allow for automatic disbursement of loyalty from the sale of NFTs to their digital wallets. By comparison, smart contracts on the Ethereum blockchain support automatic royalty payments. Similarly, Bitcoin Ordinals also do not support automatic payment of NFT royalties.

Read also: [What You Need to Know About Ordinals and BRC20](https://www.gate.io/learn/articles/what-you-need-to-know-about-ordinals-and-brc20/507 "What You Need to Know About Ordinals and BRC20")

The failure of the Bitcoin language _script_ to enable automatic disbursement of royalty payments may result in disputes among the involved parties such as NFT marketplaces and the creators.

**Benefits of using the RGB Protocol for minting Bitcoin NFTs**

Using the RGB protocol for minting Bitcoin NFTs have several benefits such as increased scalability, security, privacy, flexibility and interoperability.

**Scalability**

Since the smart contract remains outside the blockchain the limited space of the blockchain does not affect its performance. Therefore, the RGB has all the parameters to scale in terms of network size, data size and throughput.

**Interoperability**

The RGB protocol easily interacts with the Bitcoin blockchain and Lightning Network protocol. As a client-side validation, it has the capability of increasing the adoption of the <a href="/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> blockchain.

**Security and privacy**

Since the RGB protocol acts like layer-2 solution it is secure as it exists on top of the Bitcoin blockchain. In terms of privacy, one can make settings of smart contracts to allow certain people to be visible.

**Low transaction fees**

The transaction fees on the RGB protocol are very low since the activities such as minting NFTs are done off-chain. As a result, it reduces congestion on the Bitcoin blockchain.

**Flexibility**

There is much flexibility on the RGB protocol which allows the users to create custom tokens and other digital assets without using third parties.

**Potential limitations of RGB Protocol **

The RGB protocol poses a few challenges to the users which include the following:

Users should have advanced knowledge of declarative programming to use the protocol.

The smart contracts are not as widely supported as other blockchain-based smart contracts. This reduces the usability of the protocol.

## Conclusion

The RGB protocol which enables users to create Bitcoin NFTs enhances scalability and interoperability on the blockchain. It also has low transaction fees, high security and privacy which should facilitate the greater adoption of the Bitcoin network than before. The major limitation of the protocol is that users who want to create NFTs or other tokens should have knowledge of declarative programming.

## FAQs about RGB protocol and Bitcoin Ordinals

**What is RGB protocol?**

The RGB protocol is a protocol that exists on the Bitcoin blockchain that enables users to create Bitcoin NFTs and other tokens. The users mint the NFTs using the Digital Bitcoin Art and Assets (DIBA) NFT marketplace which leverages the RGB smart contract.

**What is RGB in Bitcoin?**

RGB, which stands for Really Good Bitcoin, is a protocol that exists on the Bitcoin blockchain which enables creators to mint NFTs. The developer Giacomo Zucco launched the protocol in 2016.

**What is the controversy with Bitcoin Ordinals?**

The greatest controversy with Bitcoin Ordinals is that they occupy large blockchain space which leads to congestion on the network. It leads to high transaction fees because it enables people to mint NFTs directly on the blockchain.

**Can NFT be built on Bitcoin?**

Creators can mint NFTs on the Bitcoin blockchain using the Ordinals protocol that allows people to add in_script_ions on Satoshi, Bitcoin’s smallest units. However, users can also mint NFTs on the Bitcoin blockchain using the RGB protocol.

<div class="blog-details-info">
<div>Author:** Mashell C. **, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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TL；DR

Introduction

Growth in popularity of NFTs

Understanding the RGB Protocol

Limitations of BTC language

Conclusion

FAQs about RGB protocol and Bitcoin Ordinals

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RGB Protocol Introduces Alternative Bitcoin NFTs with Ordinal Issuance

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