Dr. Adam Back, a cryptography PhD, today attended a special forum at the Legislative Yuan at the invitation of Legislator Ke, discussing "Value-added Applications of Virtual Currency: Promoting Digital Economy, Information Security Cryptography, and Financial Technology - Taking BTC Layer2 as an Example." Dr. Back also introduced the development and practical cases of the Liquid Network to the participants.

Who is Adam Back

Adam Back is a British cryptographer and a Ph.D. holder. He invented Hashcash before the advent of Bitcoin, which is a Proof of Work system used to prevent spam emails. It was referenced by Satoshi Nakamoto and served as the basis for the construction of the BTC blockchain. As a result, he is highly respected in the BTC ecosystem and the crypto community, earning the title of 'Father of BTC' and remaining active in the ecosystem.

(Defending the leading throne! Bitcoin Godfather Adam Back: In my opinion, XRP and Ethereum are both Ponzi Schemes)

In 2014, Dr. Back founded Blockstream, a blockchain technology company, and served as CEO. Blockstream's products include:

Bitcoin ecosystem's Sidechain Liquid Network

BTC wallet service Blockstream Green

BTC Development Kit Greenlight

There are other innovative technologies such as Stable Coin and RWA, aimed at enhancing the development speed and adoption of the BTC ecosystem.

Adam Back at the Legislative Council silhouette (source) The first representative BTCSidechain of the Liquid Network

At the beginning of the lecture, Dr. Back introduced the Liquid Network to the participants. The network is a Consortium Blockchain led by Blockstream, with approximately 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 confidential issuance of digital assets to enhance the functionality of the BTC network. The native asset of the Liquid Network is BTC (Liquid BTC). As a sidechain driving industry development in the early BTC ecosystem, it has led to the emergence of more BTC sidechain projects, including Stacks, RootsStocks, Drivechain, and other solutions.

Recommended reading: ABCDE | Currency or Gold? The 'scaling problem' that has been controversial in the development of BTC for 15 years. Recommended for readers who are interested in the development of BTC scaling, you can have a full understanding of the scaling attempts and projects since the establishment of BTC in just five minutes, allowing readers to have a more macro understanding of the positioning of Liquid Network in this industry development.

Liquid Network and Lightning Network

Liquid Network early on was positioned alongside the Lightning Network as two major development paths for Bitcoin Layer2. Dr. Back indicated that the former is now more focused on retail application scenarios, optimizing for the retail industry, allowing merchants to quickly receive small payments from customers at low cost;

The Liquid Network focuses on financial transactions, providing tools for traders, financial institutions, and exchanges who want to transfer large amounts of BTC or other tokens quickly and privately. It supports the TradFi framework and regulations, providing infrastructure and services for asset tokenization.

The usage scenarios of Liquid Network and Lightning Network are different, more like complementing each other instead of competing. The former focuses on the ability of retail payments, while the latter lowers the threshold for asset tokenization.

Actual Adoption Cases

In this legislative meeting, Dr. Back mainly proposed three projects that have been implemented on the Liquid Network, which are:

MIFIEL: Developed by a Mexican Financial Technology company on Liquid, the issuance of digital promissory notes to replace existing paper-based promissory notes. In response to the thriving mechanism of small-denomination promissory notes in the local financial market, security can be enhanced through digitization and blockchain technology. Currently, there is a liquidity of approximately 200 million USD in circulation.

JPYS: This asset is a stablecoin pegged to the Japanese Yen and has official cooperation with the Bank of Japan. It is used for inter-institutional clearing, and platform trading does not involve regular users.

CSMSTR: The Token is a microstrategy stock Token issued by the virtual asset service provider STOKR in Luxembourg, providing a fast and 24/7 trading market under regulated conditions.

In addition, Dr. Back also pointed out that there are potential application scenarios for Liquid Network, including bond issuance, US Treasury bond tokenization, token funds, alternative assets, computing power contract tokenization, sovereign debt, etc.

This article, Cryptography PhD Adam Back appeared in the legislature to discuss the development of BTC Layer2 and Liquid Network, first appeared on ChainNews ABMedia.