Blockstream has launched the Liquid Network, a sidechain for Bitcoin that will serve as a “production sidechain.” This means that it will be able to withstand the heavy transaction volumes that exchanges, brokers, and other services experience. Bitfinex, Xapo, BitMEX, and twenty other services participated in the network’s launch.
The Liquid Network will primarily improve transaction speeds and efficiency on the Bitcoin blockchain. It will also facilitate the movement of Bitcoin between exchanges — as the name suggests, it will make Bitcoin more liquid.
In addition, Liquid will introduce several other features and functions:
- A new token, L-BTC, which is pegged to the price of Bitcoin. Holders can readily exchange L-BTC for BTC.
- Confidential transactions, with hidden values and asset types that can only be seen by the sender and the recipient.
- Issued assets, which will allow gold, fiat currency, and securities to be tokenized and treated as Bitcoin equivalents.
The Liquid Network will be a seamless experience for users: exchanges are responsible for implementing and deploying the platform. According to Liquid’s FAQ, “users never need to directly access the Liquid Network or hold bitcoins on the Liquid Network – exchanges will do this for you.”
Users will, however, benefit from Liquid’s features if they use the exchanges that have adopted it. Participating services are listed in Blockstream’s official announcement.
Sidechains allow transactions to be performed off of Bitcoin’s main blockchain. This allows service providers to avoid the inefficiencies of the Bitcoin network. Since the Bitcoin network is quite congested, many different sidechains have been created.
The most well-known of these is undoubtedly the Lightning Network, a sidechain that promises faster transactions much like Liquid does. Lightning, however, is intended for small transactions. It relies on peer nodes with limited capacities, which has hampered its adoption somewhat. Lightning is nevertheless an increasingly viable solution for consumer transactions and content platforms.
The Liquid Network, meanwhile, is a private federated blockchain. It relies on a number of dedicated servers, which makes it much more centralized than Lightning’s network of peer nodes. However, Liquid improves on Bitcoin’s current performance substantially, which is a necessity for exchanges that perform high numbers of transactions.
Although Bitcoin continues to be the most widely supported cryptocurrency, it suffers from high fees and long transaction times, and no solution has become a universal standard. It seems that several different sidechain projects will give Bitcoin a boost in different areas as time goes on.
The post Bitcoin’s Liquid Network Launches With Several Exchanges On Board appeared first on UNHASHED.