Blockstream, a Blockchain-based solution startup, has launched a new Blockchain service called Liquid Network. The Liquid Network is an implementation of an advanced technology called Sidechain. It is a blockchain-based distributed network that provides secure and fast transactions for cryptocurrency traders.
What is sidechain?
Sidechains are complementary to existing blockchain technology that help in securely transferring the digital entities (assets, tokens, etc.) from one blockchain to other blockchain and vice versa. The sidechain is associated with the main blockchain through a channel that enables the transfer between the two ledgers.
The Sidechain then carries additional details of the transaction and thus provides an additional layer of security to the blockchain-based transactions. An important underlying technology associated with Sidechain is “Federation”. A federation is a group that acts as an intermediate to verify all the transactions that happen in Sidechain.
Liquid network
Liquid network, popularly known as “an inter-exchange settlement network” is built on the top of Bitcoin network. The liquid is based on the concept of Bitcoin sidechain but not exactly sidechain, as it involves more privacy in overseeing the transaction through its network.
The liquid network enables a fast transaction by emphasizing on trading mass exchanges through the blockchain ledger. With these functionalities, the Liquid network is said to be bringing in the use of blockchain in production.
The main features of the Liquid network are:
- Liquid Bitcoin (L-BTC): Helps companies provide end-user security for and speedy transfer of Bitcoin with settlements.
- Issues Assets: This brings Bitcoin features like tokenization, reward points, and attested assets for removing the need for dedicated wallet software.
- Confidential Transaction technology ensures the privacy of the transfer data by making sure that only transacting parties are overseeing the network.
As of its launch on 10 October ’18, 23 cryptocurrency companies are using the Liquid network for transactions. The launch of a truly private blockchain network is expected to enable financial institutes in tokenization of various assets like gold, bonds, cryptocurrencies, securities, among others.