The Liquid Network
What is the Liquid Network? Bitcoin's sidechain for faster, more private transactions.
Whitepaper (PDF): Strong Federations (Back et al.) — the technical foundation for the Liquid sidechain.
Liquid is a network that uses a number of interconnected participants — including online exchanges and other Bitcoin companies — who together ensure that the bitcoin which is locked up (and now exists and can be moved around on the Liquid network) is backed 1:1. All these participants operate within a larger setup where it would take 2/3 + 1 of them cheating to deviate from the 1:1 ratio between the amount of bitcoin locked up and the amount of Bitcoin tokens on the Liquid network. These tokens are known as Liquid Bitcoin (L-BTC). Liquid is also described as a sidechain to Bitcoin.
Features and security
This also means that, unlike the Lightning Network, Liquid is partially centralized — but, all things considered, still very secure, since it would take quite a few participants in a large conspiracy to cheat. Some of the things Liquid offers are confidential, fast, and cheap transactions with a block time of just 1 minute, and only 2 confirmed blocks are needed for a transaction to be final. So, as always, it's a trade-off between security, transaction speed, and price.
It's also possible to issue other tokens on the Liquid network. That could be a gift card, financial instruments, or a ticket to a concert, and so on. The first bond expected to be issued on Liquid is the long-awaited El Salvador Bitcoin bond, which may act as a catalyst for this type of use of the Liquid network.
These tokens can be stored and sent extremely quickly and very cost-effectively, with a high degree of security. As with Bitcoin, Liquid lets you follow transactions in a block explorer, but the size of the transaction and which token is being sent, for example, can only be seen by the sender and recipient — so there's a fairly high degree of confidentiality. No matter which token is sent on Liquid, the transaction fee is always paid in L-BTC.
When you talk about security and use the Bitcoin network as the benchmark, you can make most things sound insecure. It's important to say that, compared to the vast majority of other things, Liquid is incredibly secure. It will always be better to hold bitcoin on Liquid than on an online exchange, for example. You can also use Blockstream's JADE hardware wallet to ensure your private keys are generated offline, further securing your Liquid wallet.
Getting started with Liquid
Below are a few links if you want to learn more or perhaps try using the Liquid network yourself.
A simple way to get L-BTC if you already have BTC is to download the Blockstream Green Wallet and set up a Liquid wallet. Then you can use sideshift.ai BTC/L-BTC, where you enter a Liquid address and then send BTC to the BTC address shown to you on Sideshift. There's a small fee, and you'll soon receive sats in your Blockstream Green Liquid wallet. See the links below.