After three years of development, the Liquid technology is ready for commercial use. This was announced on October 10 by Blockstream operating director Samson Mow, whose company was engaged in the development of the Liquid sidechain. Now, 23 famous cryptocurrency companies will be able to launch and test it, as their total transaction volume accounts for more than 50 percent of all completed transactions. Mow also added that a special Bitcoin wallet will be released soon, which will speed up the process of transferring coins. Is this "liquid network" really so good and necessary?
Liquid Now Available for Everyone
In June 2017, Samson Mow assured the public at the Canadian government forum in Ottawa that in about 12 months one of the main developments of Blockstream Liquid will be launched. Earlier, DeCenter wrote about this technology and its hope for release at the end of 2018. Operational Director Mow fulfilled his promise, and after three years of working in test and beta modes, the Liquid sidechain is really ready for mass use.
The main function of Liquid sidechain is to implement large volumes of transactions between users. “The technology allows parties to quickly send funds to any place. I think we can offer the exchanges something really valuable: instant transactions, high confidentiality, and the ability to keep funds outside the exchanges,” said Mow a year ago.
The structure of Liquid can be attributed to a private blockchain, which is built on top of the Bitcoin blockchain. Due to this, instant transactions are performed, while maintaining confidentiality with the help of embedded Confidential transactions, and the ability of users to store liquid funds outside the crypto exchange, as well as conduct audits in real time using a secure protocol.
Earlier in the beta stage of Liquid, several cryptocurrency exchanges were tested, and among those interested were Bitfinex, BTCC, Kraken, Unocoin, and Xapo. Now, 18 more companies will be added to them: Atlantic Financial, Bitbank, BitMEX, Coinone, Crypto Garage, Korbit, OKCoin, and others.
“By using Liquid, we are accelerating our business path towards faster and more efficient international money transfers,” explained Sunny Ray, president and co-founder of Unocoin. Bitfinex’s former strategic director, Philip G. Potter, added that Liquid will fundamentally change digital currency exchanges, allowing traders to instantly move their Bitcoins.
Thus, the characteristics of the Liquid sidechain will be:
Fast trading: Bitcoins will be transferred between exchanges without hindrance, and, most importantly, instantly.
Increased efficiency: increase user capital by reducing balances on several exchanges.
Confirmed sidechain: each Liquid Transaction is bound to the sidechain, which, in turn, is bound to the Bitcoin blockchain, so the user commits transactions with verifiable assets. Liquid uses its own Bitcoin asset with the L-BTC ticker to carry out activities. It acts as a two-way tie to BTC and can be redeemed through the network at any time.
Better confidentiality: the function of confidential Bitcoin transactions with Liquid protects users of the exchange from control and analysis of data by the exchange itself and hackers.
Reliability: The Liquid sidechain provides users with the expected security features and decentralization. The technology will rely on the software and hardware of the exchanges themselves.
These features of the system raise many questions and doubts among some members of the crypto community.
Cons of the System
It turns out that, thanks to Liquid, the exchanges will make it easier to transfer BTC. This can destroy the idea and concept of the work of miners, who are receiving a reward for validating these kinds of transactions. Users can be rewarded in the event that the L-BTC transfer is replaced with a real BTC.
Liquid is a private network that relies on "trusted functionaries" who are part of the "consensus of participants." Representatives of Blockstream recognize that the company "will never be as decentralized as Bitcoin." Although, Samson Mow claims that no one, neither the exchange nor the company itself, will control the transactions in Liquid.
A successful Liquid sidechain will require the ultimate trust of users and government assurances, in accordance with which the rules and regulations for achieving consensus are respected.
There Is a New Wallet
In parallel with the statement about the launch of the main Liquid sidechain, Samson Mow said in a blog that in the near future a special crypto wallet, the Liquid Wallet for guaranteed fast L-BTC transactions will be presented. The manufacturers of the Trezor and Ledger hardware wallets have already expressed their willingness to cooperate with the company.
Mow also added that another wallet owned by Blockstream, the GreenAddress, already supports Liquid transaction technology.
In general, Blockstream promises to constantly enter into new agreements and continue close cooperation with cryptocurrency exchanges to ensure liquid and fast transactions within the network.