Introduction
Liquid Network is a blockchain-based financial platform developed by Blockstream. It is a sidechain platform designed to enable faster, more secure and more confidential transactions between individuals and businesses. It allows users to transfer digital assets, such as Bitcoin and Ethereum, as well as other digital tokens, quickly and securely. The Liquid Network also enables users to issue their own digital tokens, enabling them to easily create and manage their own digital asset portfolio. With its advanced features and functionality, the Liquid Network promises to be an important part of the digital asset revolution.
The Liquid Network sidechain is a separate private blockchain with two-way binding to the parent blockchain.
For money transfers, so-called fictitious tokens (L-BTC) are used. They are pegged to bitcoin at a ratio of 1:1.
The user of the parent blockchain must first send the coins to the outgoing address, where they are “locked” by the participants in the so-called federation, which is designed to exclude the possibility of spending them elsewhere.
A federation is a group of operators that acts as an intermediate point between the main chain and one of its side chains. It guarantees the interoperability of the system, as well as the ability to switch from the main blockchain to the side chain at any time.
The federation also ensures that each convertible bitcoin on the sidechain has an equivalent bitcoin frozen in a swap wallet that acts as a bridge. You can unlock them only if the authenticity of the payment is confirmed by a sufficient number of key holders.
For added security, this occurs after a certain waiting period. After that, the equivalent number of coins is transferred to the sidechain, and the user has the opportunity to spend them. When sending coins from the sidechain to the main blockchain, the process is reversed.
Transactions performed on the secondary blockchain are not recorded on the main blockchain, so fees can be much smaller or zero.
Conclusion
The Liquid Network is an innovative technology developed for trading digital assets. It offers a new level of efficiency and security, allowing for faster and more efficient transactions. The network creates a more secure and transparent environment for the trading of digital assets, allowing users to transact with greater confidence. With its innovative features, the Liquid Network is revolutionizing the way digital assets are traded in the global marketplace.
FAQ
What is Liquid Network?
Question
Answer
It enables secure and fast transfers of Bitcoin and other digital assets between users and businesses.
Liquid Network was created to help Bitcoin scale by providing a faster and more secure environment for exchanges and financial institutions.
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