You don’t often hear too much about projects building on top of Bitcoin, but it is happening. Last week, Stacks, a smart contract Layer 1 protocol that leverages Bitcoin’s base layer jumped over 50 percent due to the rise of ‘Satoshibles’, a popular NFT depicting Satoshi, which migrated from Ethereum to Stacks.
Suggested Read: COINBASE ANNOUNCES CUSTODY FOR STACKS (STX): WHY IT’S A BIG DEAL
Blockstream, an OG Bitcoin company started by crypto legend Adam Back, that issues Bitcoin satellites for completely sovereign node running, among many other things, announced they have partnered with Seychelles Stock Exchange to issue digital securities (stocks) on top of Bitcoin.
This will be done through Liquid, a Bitcoin sidechain. “Today, the Liquid Network is building new bridges between the traditional finance world of regulated securities and the blockchain technology pioneered by Bitcoin.” Like Stacks, Blockstream and the Liquid Network seek to make use of the massive capital that makes up the Bitcoin network.
As Layer 1’s have tried to steal the use case spotlight, many developers are looking to build on the most battle tested, secure network there is, and that is still Bitcoin. Just how big of a deal this is cannot be understated. As Bitcoin podcaster Brad Mills put it: “Security Tokens, Digital Securities & Blockchain based startup equity cap tables … all of this can happen on Bitcoin. Happy to see the building blocks get placed in a non-scammy way. Way to go Blockstream team!”
not every day you see a stock exchange integrated #bitcoin layer2 @Liquid_BTC for digitizing securities. pretty big news with @merjexchange and @DigtlMarkets. MERJ is the national stock exchange of 🇸🇨 Seychelles, and intends to join https://t.co/R4gXgs1Gjk liquid federation. https://t.co/tEEqpMG1ll
— Adam Back (@adam3us) October 11, 2021
Many will say that Bitcoin is too slow to be built on, but this is where the Liquid Network comes into play. As mentioned above, the Liquid Network is “a sidechain-based settlement network for traders & exchanges. Liquid enables faster, more confidential Bitcoin and Tether transactions, and the issuance of digital assets.” Since inception, Liquid has amassed over $1 billion in TVL.
James Wallace, the chair of Digital Markets, which is one of the parties to this deal said: “After studying multiple asset issuance platforms and looking at their build structure, capabilities, security characteristics, community engagement, and market adoption, we felt confident that Liquid was the best choice.”
The Liquid sidechain also has smart contract capabilities, which are of course needed to built a product offering digital securities. Liquid can issue assets natively, including security tokens “such as our BMN bitcoin mining instrument and the EXO token issued by gaming publisher Exordium, stablecoins like Liquid-based Tether (USDt) and the Japanese Yen (L-JPY), as well as NFTs, gaming tokens, and much more.”
To issue and manage the assets on Liquid, Blockstream has developed an API that businesses will use to “integrate into existing systems to expose end users to the asset capabilities of the Liquid Network.” Blockstreams API will also allow for the issuers of assets to be fully compliant with regulations and laws, allowing for custom parameters to be set.
In addition to security token issuance, Blockstream has the capability to allow companies to issue stablecoins, gold-backed tokens, and digital bonds. “Assets can then be registered with a name, ticker, and icon for display in apps integrated with the Liquid Asset Directory.”
This potential disruption of capital markets, all via Bitcoin, is a big step towards putting Bitcoin’s massive network to work. The first security will be issued in Q4, with other products to follow. Widespread adoption of Bitcoin, as a productive asset, more than a store of value, will only increase with the likes of Liquid and Blockstream, and could give Layer 1’s some major competition in the use-case space.
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