Liquid is a sidechain running on top of Bitcoin, enabling individuals and business to transact Bitcoin faster and with more features than the original Blockchain, it was created by Blockstream and was recently launched with the cooperation of 23 of the industry’s biggest exchanges including Bitfinex, Bitmex and others.
Liquid Network is a multi-asset settlement network that links together cryptocurrency exchanges and brokers around the world, one of the core uses of Liquid is fast, secure and confidential transfer of Bitcoin.
Bitcoin is first pegged to the liquid network by sending it to a Bitcoin wallet generated in their Liquid Wallet, this enables them to transact using L-BTC without using on chain Bitcoin transactions.
Just like Bitcoin’s own explorer the Liquid explorer shows information related to the peg-in transaction, confirmations, fees and the associated Bitcoin address. Along with other technical details like the unlocking script.
Blockchains and Sidechains
Bitcoin in its original, unmodified state has enormous utility. When it was created, the original designer(s) could not account for everything that would transpire after its launch. There are many aspects of the software that are final and unalterable. The consequences of final variables of Bitcoin results in a hard forks. In the occurance of a hard fork, the nodes running modified software sacrifice their ability to interact with the nodes running the original software. The altered nodes begin creating blocks differently and within six blocks there are two block chains - the original and the forked chain.
Liquid is a sidechain created by block chain company Blockstream, its production release is scheduled for May 2018 and the Liquid Release Candidate Network is a network for the participating exchanges aiming to use Liquid.
Last week, Blockstream launched the Liquid Release Candidate Network for participating Liquid exchanges. This new network marks the conclusion of the Liquid Beta program, and we are on the way to a production release in May 2018. The Liquid Release Candidate Network enables member exchanges to integrate their software with Liquid, to be ready at launch.
Paul Sztorc posted two proposals for sidechains including an implementation.
The drivechain idea was presented as two concepts. Quote:
1. The “hashrate escrow” which allows users to make their transactions vulnerable to reduced-security SPV proofs.
2. The “blind merged mining” idea which is basically a modern version of merged-mining that is specialized in order to make asymmetric sidechains as tame as possible.