An Introduction to the Liquid Network of Sidechain
The Liquid Network is simply a sidechain-based settlement network that allows the transaction of Bitcoin to be faster while also making the transaction confidential in such a way that the issuance of cryptocurrencies is very secure. As earlier stated, I said that the sidechain allows tokens and other digital assets to be transferred in and out (i.e., between the main chain and the liquid sidechain) through a verifiable peg.
The main objective of liquid is to improve the efficiency of cryptocurrency that is trending in the market. This means that liquid is for exchange platforms, traders, and those that are issuers of assets.
The use of liquid
Liquid is used to provide four vital upgrades to corporate Bitcoin users. These four main upgrades are as follows:
To issue out new assets:
Liquid allows anyone to issue out assets such as security tokens, digital collectibles, and stablecoins. This mentioned asset is not different from the liquid Bitcoin because they all have the same confidentiality and speed.
To make sure that the confidentiality of Bitcoin transactions is highly improved:
With this liquid, it is possible for transaction details to be shown to third parties that are involved.
Another use of liquid is to process the transaction of Bitcoin very quickly.
Liquid ensures that non-variable 1 minute block transaction times and 2 minute block transaction times are processed faster.
Liquid enables users to manage their cryptocurrencies or other digital assets in different exchanges:
This has been done with the API protocol that is designed in Liquid to give users access to view their portfolio.
Understanding Liquid Bitcoin
In the above explanation, I make mention of liquid Bitcoin, of which some of us reading this post might not know what liquid Bitcoin is. Liquid Bitcoin is a unique type of crypto that is found on the liquid sidechain.
The supply of liquid Bitcoin is backed by a verified one (1) to one (1) Bitcoin that is in the original chain of the Bitcoin. It is created whenever Bitcoin is shifted to the liquid network and gets terminated when Bitcoin is taken out of the liquid network. "Peg-in" is the means by which the shifting in of Bitcoin is done, whereas "peg-out" is the means by which Bitcoin is moved out of the liquid.