Days after blockchain startup Blockstream announced that it was testing a Japanese-backed stablecoin on its Liquid Network sidechain, it teased an expansion plan for the platform as well.
Quoting a blog post by the Rockwell OTC trading platform, Blockstream tweeted,
"@Blockstream has currently signed up over 23 exchanges, financial institutions, brokers, & traders to use the #LiquidNetwork. The list includes @BitMEXdotcom, @OKEx, & @bitfinex; with plans to expand to 50 firms & eventually, to several hundred." 🌊🌐⛓️ https://t.co/EPHOl7DVqQ
— Blockstream (@Blockstream) January 27, 2019
What is the Liquid Network?
The Liquid Network positions itself as the world’s first production-grade Bitcoin sidechain and promises vastly improved transaction settlement times between individuals and businesses. Blockstream says that the sidechain can provide full settlement within two minutes.
Additionally, the platform’s native asset Liquid Bitcoin (L-BTC) is, as the name suggests, pegged to the Bitcoin blockchain. Users can withdraw their balance to a normal Bitcoin wallet at any time, effectively making Liquid a federated sidechain.
Needless to say, the primary advantage of the Liquid Network is its relatively quick settlement time. It is a vast improvement over the cryptocurrency’s official settlement mechanism which can take anywhere between ten minutes and a few hours to sufficiently confirm. While the Bitcoin blockchain requires miners to computationally find blocks containing transactions every ten minutes, Liquid relies on trusted validators to authenticate each transaction.
While Liquid is significantly faster than using Bitcoin directly, the speed does come at a literal cost. At this point, transaction fees on the Liquid Network exceed that of the native Bitcoin network by almost 100 percent. However, in the past, fees have surged dramatically on the Bitcoin network due to sudden spikes in transaction volume. During such times, users either have to pay an astronomical amount in fees or wait several days for their transaction to settle on the blockchain.
Furthermore, Blockstream believes that the product is best suited for small businesses and large corporations which require quick transaction settlement times. In its current state, congestion on the Bitcoin blockchain is simply unpredictable and untenable for mission-critical applications.
Who is Betting on Liquid?
So far, Blockstream has teamed up with twenty-three cryptocurrency exchanges and firms, including Bitfinex, BitMEX, and Bitmax. While these parties help strengthen Liquid by acting as the network’s authenticators for new transactions, Blockstream does not expect new partners to fulfill the same obligation. In the future, the company hopes to sign up several hundred other businesses to improve acceptance and reliability.
Do you think the Liquid Network will become a pivotal part of Bitcoin’s growth in the future? Let us know your thoughts in the comments below!
Images courtesy of Twitter, Shutterstock