Nearly one year after the release of its sidechains white paper, bitcoin technology startup Blockstream has announced the first commercial application of the technology.
Dubbed Liquid, the unlaunched offering will serve bitcoin exchanges, payment processors and traders by reducing the time in which bitcoin-denominated funds can be transferred between accounts at these institutions.
Five major bitcoin startups – Bitfinex, BTCC, Kraken, Unocoin and Xapo – will operate the private sidechain, allowing partner exchanges to move funds between order books without the need to transfer funds on the bitcoin blockchain.
Blockstream CEO Austin Hill explained:
“The capital requirement of maintaining balances at all these exchanges is high for today’s traders. [They say] 60–70% of the trades they could make, they can’t take advantage of because of the settlement lag.”
Hill contends that Liquid will reduce the time it takes funds to move between exchanges from 60 minutes to seconds.
“That in of itself is the simplest use case,” he added.
The startups involved will participate in the operation of the sidechain, but at the same time will be customers of Blockstream, paying an undisclosed monthly subscription fee. Hill suggested that the effort is the first of what could be many commercial sidechains offerings, both from Blockstream and users of