Measure and cut 128 10-inch squares from your cotton fabric. This will give you 64 squares for the front and 64 squares for the back. With a 1/2-inch seam allowance, the finished curtain will measure 72 inches square.
Place two squares together with the right sides facing out and pin them. Top stitch diagonally across the square from one corner to the opposite corner. Repeat with the remaining corners, creating a large stitched "X" on the squares. Repeat this process with the remaining squares, which should result in a total of 64 quilted squares.
Lay out the squares on a large work surface, placing eight squares across and eight squares down. The top row be will used for hanging on the curtain rod so you will be making rod holes. These are similar to button holes but are much larger and are left with raw edges.
Measure 3 inches in from the left hand edge of the first square and draw a line with a disappearing ink pen from the top edge to the bottom edge. Measure down 3 1/2 inches from the top edge and mark on the line. Measure 3 1/2-inches up from the bottom edge and mark on the line. You should now have 3 inches between the top and bottom marks. This is where your rod hole will be. Measure and mark on the right hand edge of the block in the same way for a total of two rod holes on the square.
Top stitch around the rod hole marks 1/2 inch from each side of the line and 1/2 inch from the top and bottom of the mark. Stitch around the hole once more to reinforce the stitches. The stitched rod hole will look like a vertical rectangle. Repeat this process with each square on the top row of your curtain.
Insert the point of a seam ripper in the top mark of a rod hole. Carefully follow the line to the bottom mark of the rod hole in order to open the hole. Repeat this process with each stitched rod hole.
Sew the squares of the top row together using a 1/2-inch seam allowance, with the seams exposed on the front of the rag quilted curtain. Repeat this process with each additional row. Sew the rows together using a 1/2-inch seam allowance, with the seams exposed on the front of the curtain. Top stitch around all four edges of the curtain 1/2-inch from the edge.
Clip slits on all exposed seams of the curtain 1/4-inch apart and almost to the stitches of the seams. Do not cut through the stitches, as this creates the fringe for the raggedy part of the quilted curtain. Clip slits 1/4-inch apart on all four edges of the curtain. Do not clip around the rod holes.
Wash and dry the rag quilted curtain to fray the cut fringe. Shake the curtain outside to remove the raggedy bits of thread. Thread the curtain rod back and forth through the rod holes and hang.