Scaling Bitcoin to the next level is direly needed. The current technology is ill-equipped for mass adoption. Blockstream, a controversial software company in the Bitcoin world, is now offering a solution. The launch of Liquid Network introduces a viable sidechain solution.
The Liquid Network Concept
Various developers are looking for ways to scale Bitcoin to the next level. Blockstream is one of the collectives leading the charge. Their scaling solution goes by the name of Liquid Network. It is the first-ever sidechain solution for Bitcoin. Its main benefits include fast, secure, and confidential transactions. All of these aspects will make the world’s leading cryptocurrency more robust in the future.
So far, the Liquid Network has received significant support form service providers. Exchanges such as Bitfinex, BitMEX, and OKCoin are all running this sidechain solution at this time. This also means these providers use L-BTC, the native asset used on the Liquid Network. It is a two-way peg to Bitcoin, which provides fast and reliable transactions to network participants. Moreover, L-BTC can be redeemed by the recipient in two minutes. Compared to the current 10-minute transaction confirmation window, it offers a significant improvement.
Scaling Bitcoin is not the only benefit of Liquid Network. The technology is capable of tokenizing existing assets. A digital version of reward points or gold are just some of the options to explore. All of this can be achieved without the involvement of complex software. The primary short-term use case for Liquid Network will revolve around Bitcoin first and foremost.
Expanding the Overall Functionality
In its current form, Blockstream’s solution introduces many benefits. Not just in terms of faster transactions. Unlike the current version of Bitcoin, Liquid network facilitates private transactions. It masks the amount and asset type broadcasted to the network. Transacting parties will remain privy to all information at all times.
Blockstream also indicates they will continue to enhance the technology. Third-party hardware wallet support will be added in the near future. Owners of the Trezor and Ledger products can benefit from this upcoming integration. Overall, it is a positive development for Bitcoin. Not everyone sees it that way, as is to be expected.
Bitcoin needs solutions like these to grow and evolve. Although Liquid network may not be perfect, it marks an important first step. There is still work to be done prior to taking Bitcoin into the mainstream. Sidechains are one possible way of scaling Bitcoin and other cryptocurrencies.
How does Liquid Network compare to Lightning Network in terms of Bitcoin scaling? Which is your preference? Let us know in the comments below.
Images courtesy of ShutterStock