The widespread adoption of Bitcoin faces challenges due to its limited transaction speed and lack of privacy. Protocol changes, known as Layer-1 solutions, have drawbacks that compromise decentralization and security. Off-chain solutions, or Layer-2 solutions, work above the primary blockchain protocol without changing it.
A great example of such a solution is the Liquid Network, which targets Bitcoin’s transactional pace and privacy problems. The following article investigates how the adoption of the Liquid Network would impact the Bitcoin ecosystem. In order to see more, you can visit bitqt-app.com.
About Bitcoin Liquid Network
The Bitcoin blockchain houses the Liquid Network – a sidechain that operates independently. A two-way peg enables the main chain to interact with the layer-2 network. The value of the assets on a sidechain mirrors the worth of its corresponding native assets, thereby facilitating the use of tokens and coins on an alternative blockchain. The Liquid Network is a platform that allows you to create crypto transactions more rapidly, more securely, and privately. It is built in addition to the Bitcoin blockchain, yet has its methods to boost the number of transactions and also to help keep them much more individual.
This can make the issuance, transfer as well and trading of a variety of electronic assets as well as tokens simpler as well as less hazardous. The Liquid Network acts mainly for institutional investors, exchanges, and crypto traders along with other venture customers that need a greater degree of secrecy as well as quicker transaction speeds. In case they are not a fellow member of the Liquid Network directly, individual investors can not make use of the Liquid Network directly.
How does Liquid Network work?
The Liquid Network provides a means to make use of Bitcoin (BTC) on its chain by making a wrapper variation known as L-BTC. Those who use the Liquid Network spend Bitcoin to some Lightning Network address in the Bitcoin blockchain in what is known as a “peg-in” procedure. After a transaction receives a 102 confirmation, a similar quantity of L-BTC is produced on the Liquid Network and also delivered to the customer’s address. You can make use of your L-BTC on the Liquid Network by virtually any means you would like.
You can exchange it on the marketplaces that support Liquid or purchase assets along with electronic collectibles that can be purchased on the system. A “peg-out” procedure could be started whenever you wish to transform your L BTC to BTC. This is likely to involve delivering the L-BTC to a place in which it will be burnt as well as destroyed.
When this particular transaction is verified, a fellow member of the Lightning Network is going to return the first Bitcoin on the Bitcoin blockchain. Similar to Bitcoin, Liquid Network produces new blocks in an entirely different way. There are fifteen Liquid Network functionaries rather than miners that bundle payments and sign them. These functionaries function as complete nodes and make certain that new actions are legitimate and that blocks are included in the chain.
What are the advantages of Liquid Networks?
- Privacy: Bitcoin is fully transparent, which means payments can be traced and wallet balances might be looked at. This could however result in frontrunning. This can be resolved by utilizing Confidential Transactions on the Liquid Network, which hides the transaction specifics from outsiders
- Trustless atomic swaps: By utilizing Atomic Swaps, individuals can perform cryptocurrency transactions in a direct and decentralized manner, without requiring a third-party intermediary or exchange
- Quick transactions: The Liquid Network’s super quick transactions make it ideal for arbitrage traders who want to perform cross-exchange trades rapidly to increase earnings
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Read More: What Makes Liquid Network An Ideal Starting Point For Newcomers To Explore