Liquid Network
The Liquid Network is a Bitcoin sidechain run by a federation, on which bitcoin circulates as L-BTC with one-minute blocks and hidden transaction amounts.
What Is Liquid Network?
The Liquid Network is a Bitcoin sidechain developed by Blockstream. Bitcoin moved onto it becomes Liquid Bitcoin (L-BTC), pegged one to one to BTC, and can be sent with blocks produced every minute and with amounts hidden from outside observers.
Liquid is not secured by miners. A federation of companies, including exchanges and infrastructure firms, runs the servers that sign blocks and jointly holds the bitcoin backing L-BTC in a multisignature arrangement. Users therefore trust that a large majority of the federation stays honest and available, which is a different trust model from holding coins on Bitcoin itself.
Confidential Transactions conceal the amount and the asset type of each transfer by default, while the transaction graph remains visible. Liquid also supports issued assets, such as stablecoins and tokenised securities, that move under the same rules as L-BTC.
Redeeming L-BTC for BTC directly is reserved for federation members, so most users exchange it through a swap service or an exchange. Hardware wallet support is narrower than for Bitcoin: Blockstream's Jade devices support Liquid, and other wallets have to be checked model by model. Liquid addresses differ from Bitcoin addresses, and the two must not be mixed.
Bitcoin (BTC) is the first decentralized cryptocurrency, launched in 2009. It uses blockchain technology for secure, peer-to-peer digital transactions without intermediaries.
Read full definition: BitcoinA sidechain is a separate blockchain connected to a main chain, allowing for faster transactions or experimentation without affecting the main chain's security.
Read full definition: SidechainMultisig (multi-signature) is a security feature that requires multiple private keys to authorize a transaction, enhancing protection against unauthorized access in blockchain networks.
Read full definition: MultisigA stablecoin is a cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar or backed by reserves.
In cryptocurrency, a swap is the direct exchange of one token for another on a blockchain, often via decentralized exchanges (DEXs) without intermediaries.
A hardware wallet is a dedicated device that keeps private keys offline and signs transactions internally, so the keys never reach an internet-connected computer or phone.
Jade is a hardware wallet from Blockstream, designed to securely store Bitcoin private keys offline, ensuring safe transactions and protection from online threats.
Read full definition: JadeReal-World Examples
Example 1: A trader moves L-BTC from one exchange to another within minutes, and outside observers cannot see the amount.
Example 2: A Blockstream Jade Plus user holds L-BTC and a stablecoin issued on Liquid in the same wallet and confirms every receiving address on the device screen.
Example 3: Someone who plans to hold for years swaps L-BTC back to BTC and sends it to a Bitcoin address on their hardware wallet, because they prefer not to depend on the federation for long-term savings.
Bitcoin (BTC) is the first decentralized cryptocurrency, launched in 2009. It uses blockchain technology for secure, peer-to-peer digital transactions without intermediaries.
Read full definition: BitcoinA stablecoin is a cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar or backed by reserves.
A wallet address is the public identifier others use to send you crypto. It is derived from a public key and is safe to share.
Read full definition: Wallet AddressIn cryptocurrency, a swap is the direct exchange of one token for another on a blockchain, often via decentralized exchanges (DEXs) without intermediaries.
A hardware wallet is a dedicated device that keeps private keys offline and signs transactions internally, so the keys never reach an internet-connected computer or phone.
Frequently Asked Questions
Is L-BTC as safe as bitcoin on the main chain?
It rests on a different trust model. Liquid is not secured by miners: a federation of companies signs blocks and jointly holds the bitcoin backing L-BTC in a multisignature arrangement. Users trust that a large majority of the federation stays honest and available. Some holders swap back to BTC for long-term savings so as not to depend on the federation.
Are Liquid transactions fully private?
Not fully. Confidential Transactions conceal the amount and the asset type of each transfer by default, but the transaction graph remains visible. Outside observers cannot see how much was sent or which asset moved, yet they can still follow how transactions are connected.
How do I turn L-BTC back into BTC?
Most users exchange it through a swap service or an exchange, because redeeming L-BTC for BTC directly is reserved for federation members. Liquid addresses differ from Bitcoin addresses, so make sure the BTC goes to a Bitcoin address and never mix the two formats.
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