Coindesk is reporting today that the world's first Bitcoin sidechain, named "Liquid," is live and being supported by 23 companies, in addition to the creators, Blockstream. This should allow the contributing organizations access to faster transactions than on the main chain, but it comes at a slight cost to decentralization.
Blockstream has been working on this side chain for years. The way it works in short is that it transfers Bitcoin onto Liquid by converting it into LBTC, the coin native to the Liquid chain. Then transactions can be done on this chain, which is smaller and therefore much faster, and when users want to "cash out" they can convert back into Bitcoin. It is similar to but uniquely different than the Lightning Network.
The major caveat of this system is that the sidechain is maintained by Blockstream and its 23 partners, some of which include Bitfinex, BitMEX, BTCBOX, BTSE, Coinone, Korbit, L2B Global, OKCoin, Unocoin, Xapo, XBTO and Zaif. The problem here is most users wanted a "trustless" sidechain, not one controlled by many companies.
Still, from the point of view of Blockstream and its partners, this is a perfect solution. It will allow them to offer massively faster transaction times and increased security. As long as you trust the companies running the chain, it's no problem!
Twitter users were showing some initial support for this move:
Don't underestimate @Blockstream's #LiquidNetwork sidechain launch. It's kind of a big deal.— Lucas Nuzzi (@LucasNuzzi) October 11, 2018
I get it, federated round robin consensus doesn't sound appealing, but it's a start. The implications of usable sidechains are huge and the positives certainly outweigh the negatives👇
Will this become a huge step forward for crypto? Will we see more sidechains in the near future? Will we see a trustless sidechain? The answers to all this and more are coming, just stay here with Chepicap to find out!