Cryptography PhD Adam Back was invited by legislator Ke-Chun Ko to the Legislative Yuan today to give a special lecture on "Virtual Currency Value-Added Applications: Digital Economy, Cybersecurity Cryptography and the Promotion of Financial Technology - Taking Bitcoin Layer2 as an Example". During the event, Dr. Back also introduced the current development and practical cases of the Liquid Network.
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ToggleWho is Adam Back
Adam Back is a British cryptographer with a PhD. He invented Hashcash, a proof-of-work system to combat spam, before the advent of Bitcoin, and his work was cited by Satoshi Nakamoto and formed the basis of the Bitcoin blockchain. He is highly respected in the Bitcoin ecosystem and the crypto community, and is known as the "Bitcoin Godfather".
In 2014, Dr. Back founded the blockchain technology company Blockstream and served as its CEO. Blockstream's products include:
- The sidechain of the Bitcoin ecosystem, Liquid Network
- Bitcoin wallet service Blockstream Green
- Bitcoin development kit Greenlight
They also have other innovative technologies such as stablecoins and RWA, aiming to accelerate the development and adoption of the Bitcoin ecosystem.
Liquid Network
The first representative Bitcoin sidechain
At the beginning of the lecture, Dr. Back introduced the Liquid Network to the attendees. The Liquid Network is a federated blockchain developed by Blockstream, with around 70 members responsible for maintaining the network, including some financial institutions and startups.
The goal of the Liquid Network is to achieve faster and more private digital asset issuance to enhance the functionality of the Bitcoin network. The native asset of the Liquid Network is Bitcoin (Liquid BTC). As an early Bitcoin ecosystem sidechain, it has driven industry development and led to the emergence of more Bitcoin sidechain projects, including Stacks, RootsStocks, and Drivechain.
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Recommended for readers interested in the development of Bitcoin scaling, this can provide a comprehensive understanding of the scaling attempts and projects in the history of Bitcoin in just five minutes, allowing readers to have a more macro perspective on the positioning of the Liquid Network in this industry development.
Liquid Network and Lightning Network
In the early days, the Liquid Network and the Lightning Network were the two main development paths for Bitcoin Layer2. Dr. Back stated that the former is now more focused on retail application scenarios, optimizing for retailers to quickly receive small payments from customers at low cost;
While the Liquid Network focuses on financial transactions, providing tools for traders, financial institutions and exchanges who want to quickly and privately transfer large amounts of Bitcoin or other tokens, and supports traditional financial frameworks and regulations, providing infrastructure and services for asset tokenization.
The Liquid Network and the Lightning Network have different use cases, and they are more complementary than competitive. The former focuses on the ability to make retail payments, while the latter lowers the threshold for asset tokenization.
Practical adoption cases
In this Legislative Yuan seminar, Dr. Back mainly presented three projects that have been implemented on the Liquid Network:
- MIFIEL: Developed by a Mexican fintech company on Liquid, it issues digitized promissory notes to replace existing paper promissory notes, in response to the thriving small-scale promissory note mechanism in the local financial market. Digitalization and on-chain can improve security, with a current liquidity of about $2 billion in circulating promissory notes.
- JPYS: This asset is a Japanese yen stablecoin, with official cooperation with the Japanese Financial Services Agency. It is used for institutional clearing, and the platform does not involve general users.
- CSMSTR: This token is issued by the Luxembourg virtual asset service provider STOKR, a micro-strategy stock token, providing a fast and 24/7 trading market under regulatory conditions.
In addition, Dr. Back also pointed out that there are potential application scenarios for the Liquid Network, including bond issuance, US Treasury tokenization, token funds, alternative assets, computing power contract tokenization, and sovereign debt.
