Let’sforget the controversy surrounding Bitfinex and look on the brightside. A Bitcoin sidechain, Liquid, developed by Blockstream haslaunched its coin on Bitfinex.
DubbedLiquid Bitcoin (LBTC), the coin can now be deposited or withdrawn onBitfinex. The coin has a ratio of 1:1 with Bitcoin. The Liquidnetwork is controlled by institutions which include cryptocurrencyexchanges. The current members of the network include Tilde, Huobi,BTCTrader, DMM Bitcoin, among others.
According to Paolo Ardoino, CTO, Bitfinex:
“IssuingBitcoin, stablecoins, and various other digital assets under oneblockchain platform makes a lot of sense. It reduces the integrationburden for an exchange like ourselves, and traders can manage alltheir assets from a single wallet application.”
LBTCis Bitcoin on the Liquid network. As stated by Blockstream, Liquid is an inter-exchangesettlement platform that connects virtual currency exchanges andother institutions across the globe. This, in turn, facilitatesfaster BTC transactions plus the issuance of digital assets. Thespeed of Liquid proves beneficial for traders engaged in arbitrage.
Althoughthe chain was initially closed to a select few, it is slowly lettingthe general public to have a feel of the network using the Liquidclient.
Asnoted by Blockstream’s Mario Gibney, apart from allowing Liquidusers to send funds to other users without an intermediary,Blockstream is considering supporting “an easy-to-use-mobilewallet.”
“Andas more exchanges integrate (as Bitfinex and the Rock Trading alreadyhave), then users will be able to deposit and withdraw from thoseexchanges within 2 minutes.”
TheLiquid network is a permissioned platform with 15 entities selectedto validate and commit transactions. While this may not be the bestapproach, once those using the platform build trust with thevalidators, it “would make transfers pretty much instant, and thuswould make arbitrage a lot faster.”