Blockstream’s Liquid Bitcoin Sidechain Sees First Live Action, Will Use LBTC As Liquid Bitcoin Token
The San Francisco startup known as Blockstream has launched bitcoin’s first sidechain known as Liquid. The implementation is one of the most advanced sidechains in which Bitcoin developers were working on.
The @Blockstream team is excited to announce the #LiquidNetwork is now live with 23 members! Liquid enables fast, secure, and confidential transactions, along with digital asset issuance on the world's first production #Bitcoin #sidechain. 🔒⛓️🌊 https://t.co/hWkU2bd1ku pic.twitter.com/IBvDIoHCsS
— Blockstream (@Blockstream) October 10, 2018
Liquid is a chain that is built in another layer and not on the live Bitcoin’s blockchain. It will be able of carrying large volumes of transactions in an efficient way. At the moment, Liquid will be available for large companies and exchanges that need to process an important number of large transactions.
The project has been developed over the last three years. Since 2015 when Blockstream released the idea, different things happened in the crypto space. For example, Bitcoin Cash (BCH) separated from Bitcoin in order to solve scalability issues.
There are 23 different cryptocurrency companies that are going to embrace Liquid. We can include to the list Altonomy, Atlantic Financial, Bitbank, Bitfinex, Bitmax, Korbit, Xapo, XBTO and Zaif among others. As CoinMarketCap shows, these companies account for over 50 to 60 per cent of Bitcoin’s trading volume.
Samson Mow, Blockstream CSO said that with Liquid it will be possible to trade more securely and rapidly. At the same time, he mentioned that it will be very positive for the whole cryptocurrency market and space.
Additionally, he said that it is already ready for commercial use and that exchanges can start using it.
In order for it to work, exchanges need to convert Bitcoin into LBTC, which is the liquid bitcoin token. The LBTC is pegged to Bitcoin and it allows users to transact funds through this chain quicker and faster than on the main Bitcoin chain.
On the matter, Paolo Ardonio, Bitfinex CTO commented:
“If there’s one thing our traders need, it’s speed. Liquid delivers that in spades. Liquid’s instant settlements will allow our traders to achieve faster bitcoin deposits and withdrawals, more efficient arbitrage, and even better pricing though tighter spreads.”
It is important to mention that Liquid is a ‘federated sidechain.’ This is different from building a sidechain that allows users to swap bitcoins for sidechain coins with a trusted third party. This network relies on a group of companies that manage the sidechains.
However, there are some crypto enthusiasts that believe that this is not what the market is expecting. According to a bitcoin subreddit moderator, this tech is ‘not innovative.’
Although it might not be the ideal solution, it helps to solve different issues that the Bitcoin network is currently experiencing. We are talking about moving money faster, launch tokens and reduce costs. Mow, for example, said that launching tokens on the platform works better than doing it on Ethereum.
In the near future, Blockstream will also release a wallet that has been specifically designed to handle Liquid transactions. At the same time, companies such as Ledger and Trezor have announced their intentions to support the technology implemented and developed by Blockstream.
“From a high-level view, Blockstream was founded on two-way peg sidechains,” explains Mow. “So, you could say Liquid is essentially our company purpose. If you look at it that way, it’s been a few years in the making, but actual R&D has been two years.”
Now the technology is live and will potentially handle billions of dollars worth of Bitcoin each day. The company will be working in order to integrate the solution into more platforms in the market, including exchanges and other companies.