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Blockstream unveils Liquid Securities: Security tokens for Bitcoin sidechains

Posted: 16 May 2019 3:00 am News

Picture not described: shutterstock-crypto-blockchain-network-circles-738x410.jpg Image: Getty

The security token race is heating up with a new contestant from Blockstream.

Blockstream announced Liquid Securities today, drastically heating up the still-young security token market overnight.

"Liquid Securities is a way to issue assets which are compliant with the needs of security issuers," explains Blockstream founder and CSO Jonathan Wilkinson.

"Liquid Securities uses what's called the Liquid Authoriser to enable these transactions to occur or be rejected."

The idea of a system that can automatically assess the information embedded on a digital token, plus the sender and receiver's information, and then automatically accept or reject certain transactions is at the heart of what security tokens do.

The utility is obvious, but there are a number of different ways to reach this goal.

Liquid's system, with the Liquid Authoriser, delivers three benefits in particular, of varying degrees of uniqueness.

The three benefits, Wilkinson says, are that one can:
1. Publicly verify the legitimacy of the asset and make sure that it has a true legal pedigree of ownership.
2. Make sure that the asset is fully auditable and verifiable against the blockchain.
3. Make sure that the asset can do all this while providing privacy for its users.

It's "an enhancer for the serious players that need all three", Wilkinson explains.

The privacy element in particular sets Liquid apart, notes TokenSoft CEO Mason Borda.

“There's been significant demand for liquid," he says, and, in his experience, two of the features most in demand from customers are privacy and scalability.

Wilkinson also cites Liquid's use of the Bitcoin codebase as an in-demand feature.

"What Liquid gives you is a lot of the security and stability that's associated with Bitcoin," he notes. "We've forked the code of bitcoin and built liquid on top of that."

"Blockstream Liquid is the only blockchain we're aware of that can issue assets but allow transfers to be private... It's the battle-tested, robust framework."

These strong words might come courtesy of growing competition in the security token issuance space. Polymath, widely regarded as one of the premier security token platforms, recently unveiled its own token creation platform, and there are many more.

The emergence of so many token platforms is a healthy sign of demand in the market, Wilkinson says. And all that demand means the real world will serve as a valuable testing ground for the new technology, by ensuring the new breed of security token providers is able to scale up to meet that demand.

"There's a lot of interest in the space. What's going to differentiate the offering there is how they can scale up to meet the demand," he says. "It's a good sign the industry’s ready to grow."

This environment may brew some standardisation problems in the near future, but in the long run, this is looking to be a very solvable problem.

In the shorter run, however, Liquid's wide range of affiliated exchanges means you might see security tokens being much more widely available before long.


Disclosure: At the time of writing, the author holds BTC, BNB and ATOM.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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