Now the Lightning Network has some new competition in the Bitcoin space. Now is the right moment for the launch of the sidechain liquid network which is a protocol with the same goal as the lightning network. The main difference between the two is that the liquid network focuses more on enterprise-grade blockchain use.
Despite the fact that some of the biggest blockchain companies participated in the launch of the liquid network, the news has been under the radar of most crypto enthusiasts. The list of participants in the protocol launch includes Atlantic Financial, Bitbank, Bitfinex, BitMEX, OKCoin, Coinone, and many more. Participants showed anticipation around this Lightning Network alternative.
How Do Liquid Network Sidechains Work?
The liquid sidechain network uses a federated sidechain protocol to solve the Bitcoin transaction congestion problem, reducing high fees and delayed transaction times. This protocol works both ways, focusing on the Bitcoin sidechain. Thus, all existing transactions can become real digital asset references.
The liquid protocol also works based on element code and incorporates federated Blockstream technology. This financial technology facilitates the transfer of assets across the Bitcoin chain and is the core protocol governing the platform’s functioning. According to a blog post on Blockstream, this protocol will provide four significant improvements for corporations using Bitcoin:
- The liquid protocol allows for near-instant transfers between exchanges. This feature provides traders with more opportunities by eliminating delays between trades.
- This platform allows users to manage their digital assets across different exchanges better. The API protocol enables real-time monitoring of your portfolio.
- Incorporation of Privacy features such as confidential transactions is standard in the Liquid protocol. Many analysts believe the crypto space demands more anonymity within the Bitcoin network.
- Liquid uses a signed block consensus mechanism that ensures new blocks are added within one minute. These predefined timings help improve the reliability of the entire Liquid platform.
Liquid’s primary customer base is crypto exchanges. A platform can easily send Bitcoins to each other without delay. Additional features, such as Secret Transactions, make the Liquid sidechain an attractive alternative for larger companies looking to enter the blockchain sector.
Lightning Network vs. Liquid
First of all, we must understand that these two off-chain protocols cater to different parts of the crypto community. The Liquid network was explicitly built for exchanges, brokers, and traders. The advantage of this design is that the amount sent between parties avoids limiting the channel capacity. Liquid also reduced delays resulting from a lack of one-sided cooperation.
The Lightning Network design is perfect for both personal and business use. The Lighting Network incorporates private payment channels to reduce bottlenecks on the Bitcoin blockchain. Users can send and receive unlimited payments through this portal. Data is added to the blockchain after the closing of the payment channel.
As these two revolutionary protocols see the potential for increased adoption in the crypto space, it will be interesting to see the effect of using the Liquid network on the market in the coming months. One thing is for sure. They choose their clients carefully.