Liquid Network
Liquid Network is a federated sidechain on Bitcoin, developed by Blockstream, offering fast (2-minute finality) and confidential transactions for exchanges, traders and digital asset issuers.
Liquid moves BTC (peg-in) to a sidechain with a federation of 15+ authorised functionaries (exchanges, companies) managing a 15-of-11 signer multisig. Advantages: faster settlement, confidential transactions (hidden amounts), support for token issuance (security tokens, stablecoins). Downside: less decentralised than Bitcoin itself — you trust the federation. Use case: institutional, non-retail Bitcoin use.
Example
A crypto exchange arbitrages BTC price differences. Via Bitcoin mainchain: 10–60 min per transfer. Via Liquid: 2 min, confidential amounts, L-BTC 1:1 redeemable. Market making becomes feasible.
Frequently asked questions
Is Liquid as safe as Bitcoin?
No. Liquid trusts a federation multisig. Bitcoin: trustless. Liquid trade-off: more functionality for slightly less decentralisation. Not for long-term self-custody of large amounts.
Liquid or Lightning — when?
Lightning: micropayments, retail. Liquid: larger amounts, confidentiality, inter-exchange. They complement each other — both build on Bitcoin as settlement layer.
Related terms
Further reading
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