Blockstream Announces the Launch of Liquid Sidechain for Bitcoin
San Francisco-based blockchain startup Blockstream announced the launch of world’s first Bitcoin sidechain called the Liquid Network. For the ones new to sidechains, it is nothing but a second layer scalability network aimed to improve the performance of the Bitcoin blockchain. The main purpose of the sidechain technology is improved transaction facility, faster settlements, and tokenization of different assets.
The Bitcoin sidechain keeps complete details and records of the Bitcoin decentralized ledger. However, transactions which occur on the sidechains need not be added to the blocks of the main Bitcoin network.
According to Blockstream, Liquid Network is “an innovative sidechain built on the Bitcoin network, facilitating faster bitcoin transactions between businesses and individuals, while enabling extended functionality.”
The Liquid Network sidechain has got its own native digital token called the Liquid-Bitcoin token (L-BTC). The L-BTC is pegged to the original BTC, meaning the sidechain’s blockchain matches Bitcoin’s. The L-BTC is a “two-way pegged” token and thus can be seamlessly swapped back and forth on the Bitcoin blockchain. Samson Mow, chief strategy officer at Blockstream, says that this native settlement facilitates better speed and privacy.
Blockstream says that the Liquid Network will rely on hardware and software run by different industry businesses. It notes: “The participating exchanges and Bitcoin businesses deploy the software and hardware that make up the Liquid network, so that they can peg in and out of the Bitcoin blockchain and offer Liquid’s features to their traders. Liquid provides a more secure and efficient system for exchange-side bitcoin to move across the network.”
To be noted, the Liquid network is composed of a “consensus of participants” and relies on “trusted functionaries”. Blockstream says that the Liquid Network will never be as decentralized as Bitcoin. However, Mow noted that no single party, including Blockstream, will have control over the Liquid Network.
The concept of Liquid Network Bitcoin sidechain sounds quite similar to the Lightning Network scalability solution. However, the two have different purpose of operations and functionality. Lightning Network is focused more towards handing micro-payments at absolutely reduced costs and fast settlement times. On the other hand, Liquid Network serves large financial transactions and exchanges with huge volumes.
A total of 23 Bitcoin companies including brokers, exchanges and other other institutions have pledged support to the Liquid sidechain. The companies will be using this sidechain to send BTC transactions.
The full list includes companies like Altonomy, Atlantic Financial, Bitbank, Bitfinex, Bitmax, BitMEX, Bitso, BTCBOX, BTSE, Buull Exchange, DGroup, Coinone, Crypto Garage, GOPAX, Korbit, L2B Global, OKCoin, The Rock Trading, SIX Digital Exchange, Unocoin, Xapo, XBTO and Zaif.