Introduction of Single-Use Seals

Rather than relying on a trusted party to validate the sealing and unsealing of digital seals, Bitcoin's Unspent Transaction Outputs (UTXOs) can serve as seals themselves. An UTXO can be viewed as a seal that is closed upon its creation and unlocked when it is used in a transaction. Due to the consensus rules of Bitcoin, an output can only be utilized once, meaning that if it's used as a seal, the same incentives that uphold Bitcoin's consensus rules will ensure that the seal can be opened just a single time.

To present a more concrete example, consider an ownership certificate that stipulates the requirement to spend a specific Bitcoin UTXO (controlled by the owner) as a condition for transferring ownership to someone else. When this UTXO is spent, the corresponding Bitcoin transaction indicates the new property owner. However, due to Bitcoin's data structures being strictly constrained, embedding full details about the recipient within the Bitcoin transaction is not only restrictive but also compromises privacy. A more effective method is to include in the Bitcoin transaction only a commitment to the identity of the recipient (for instance, a hash of the recipient's UTXO in the output field).

The ownership transfer essentially constitutes a modification to the initial contract, specifying the new Bitcoin UTXO that now holds the ownership rights.

The XRBG Wallet has implemented the spending and creation of UTXOs within the Bitcoin network as mentioned above, seamlessly supporting the full range of RGB asset functionalities.