Blockstream To Launch Sidechain

As bitcoin has gained popularity over the past few years, the system that the cryptocurrency runs on began to face some growing pains.

Developers started to worry that the existing framework wouldn't be able to support continued growth; new ideas about how blockchain, the ledger-like technology that bitcoin runs on, could be used in other industries began to emerge.

Those issues threatened to tear bitcoin apart, as the cryptocurrency community debated whether changes to the way bitcoin operates would take away from its decentralized nature. However, a startup called Blockstream says it has created a solution that will allow bitcoin to grow while keeping its original framework intact.

Sidechain

Blockstream has developed a new technology called sidechain, which runs alongside blockchain.

The system will allow developers to create their own blockchain systems, while keeping them pegged to bitcoin's blockchain. Blockstream says that if successful, sidechains will eliminate the need for banks and startups to create completely new systems based on blockchain and will allow new ventures to work seamlessly together with bitcoin.

Related Link: Bitcoin May Be Flailing, But Blockchain Is On The Rise

Liquid

At the beginning of 2016, Blockstream is set to unveil the first ever sidechain, dubbed Liquid.

Liquid is aimed at bitcoin exchanges and will allow exchanges, payment processors and traders to transfer funds between accounts without making any changes to the bitcoin blockchain. This new system is expected to cut down on money transfer times and allow Liquid users more freedom. Transactions made on the sidechain won't be subject to the same rules that those made on bitcoin's blockchain, but it is set up in such a way that users can still transfer back to the bitcoin blockchain later on.

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