The release of a working sidechain has been a long-awaited milestone in the Bitcoin ecosystem.
Initially proposed by Satoshi in the early days, sidechains run in parallel to the main chain and
promise to massively augment the capabilities of the Bitcoin base layer, in such a way that its
security is not undermined.
Blockstream’s Liquid is paving the way for innovation in this domain, bringing to life one of the first sidechains and establishing a blueprint for future second-layer solutions. In areas where the Bitcoin blockchain is lacking, Liquid extends the protocol so as to provide users, developers, and businesses with additional functionality to cater to a myriad of use cases.
For exchanges, the Liquid Network is an attractive layer because of the speed of transaction finality. The Liquid Network has one minute block intervals that unlike other short block interval blockchains, has transaction finality after just two blocks with no chain reorg risks.
Users can move main chain BTC into Liquid by sending coins to a special address where they are locked, and then receive an equal amount of Liquid Bitcoin (L-BTC) on the Liquid sidechain. Since there is a 1:1 peg between BTC and Liquid BTC, users can freely swap into and out of Bitcoin and Liquid without price or exchange rate volatility.
Another exciting aspect of the Liquid Network is the fact that Confidential Transactions are baked-in by default, making L-BTC fully fungible and not susceptible to the same chain analysis that Bitcoin is prone to.
Finally, Liquid satisfies the modern demand for digital tokens and assets, with Liquid Issued Assets native to the chain, without any meta layers like the clumsy and ill-thought Counterparty and OMNI protocols. Issued Assets also benefit from Confidential Transactions making it the only fully fungible token platform available. On top of this, single-chain atomic swaps between assets or assets and L-BTC are possible, removing counterparty risk.
At BTSE, we’re firm believers in Liquid’s potential, not only as its own self-contained network but in its ability to set the pace for sidechain development across the board. Though still in its early phases, I have no doubt that it will serve as the backbone for a plethora of applications in industries ranging from gaming to finance. In so far as the concept of ‘programmable money’ is concerned, Liquid truly turbocharges the capabilities of the Bitcoin blockchain.
Our aim is to create a platform that offers you the most enjoyable trading experience. If you have questions or suggestions, please don’t hesitate to reach out to us at firstname.lastname@example.org or DM us on Twitter: @BTSEcom.