At Consensus Distributed on May 12th, Blockstream introduced Lightnite, a Fortnite-like game that uses the Liquid Network to store non-expendable tokens (NFT) representing game items.
While the game is developed by independent company Satoshi’s Games, Blockstream has sponsored the game by giving away tokens.
The announcement has received a considerable amount of criticism from Ethereum (ETH) fans, given the longstanding rivalry with Bitcoin’s (BTC) „maximalists. Non-fungible tokens are traditionally associated with Ethereum and other smart contract block chains, and they have received constant criticism from members of the Bitcoin community as part of that association.
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Benjamin DiFrancesco, an Ethereum collaborator and founder of Scopelift, tweeted that this is part of a narrative change:
„Narrative change alert: we go from ‚things like NFT are dumb and useless‘ to ‚Bitcoin can do things like NFT‘.“
Not all members of the Bitcoin community welcomed Liquid’s NFTs, with noted Ethereum critic Udi Wertheimer commenting that „no one wants NFTs.
What is Liquid?
Lightnite’s sales pitch mentions that players win Bitcoin while playing, while Marty Bent, host of Bitcoin’s „Tales from the Crypt“ podcast, praised the NFT initiative in an article, saying
„Bitcoin can support the use of cases that many altcoin scammers have tried to say they can’t.“
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But Liquid is not Bitcoin. It is a side chain using BTC through a trust bridge maintained by the Liquid federation, which includes mainly exchanges. Although it’s based on the Bitcoin base code, it goes further at the same time, adding faster-than-average finality, tokenized assets, and confidential chain transactions.
This is done at the price of decentralization. The chain of blocks is fully validated by the federation, which decides for itself who can be part of it. It maintains custody of the BTC used for the Liquid Bridge, and Blockstream maintains multi-signature recovery keys for emergency situations.
This is in contrast to other side-chain implementations such as RSK. Despite having a similar federated bridge, it still relies on the Bitcoin decentralized security model.
Ethereum itself can also be considered a Bitcoin side chain with the introduction of wrapped BTC tokens.
A side chain for traders
Neil Woodfine, Blockstream’s marketing director, told Cointelegraph that Liquid is intended to be an improvement on the status quo. Bitcoin’s exchange industry is „extremely centralized at the moment,“ he said, and they prefer to rely on a federation of them rather than a single exchange. He added:
„As to the question of whether it is as decentralized as Bitcoin Profit withdraw crypto, Bitcoin Evolution sign up real name, Bitcoin Circuit erc20 reddit, Bitcoin Era cheapside customer service, Immediate Edge uk complaints, min deposit Bitcoin Trader, Bitcoin Billionaire tax france, when ripple on Bitcoin Revolution, Bitcoin Code intraday trading, The News Spy alternative low fee, it is not, for sure. But does it need to be for this particular application? Is it already improving the old system? I think so in that sense.“
Liquid is designed to remove the burden of exchange transactions on the Bitcoin network, which are „perhaps even the bulk“ of its activity, Woodfine said, adding that a dynamic federation is also planned soon.
He downplayed the level of centralization of the chain, noting that anyone can easily launch observation nodes. „If the federation ever decided to misbehave, they [users] could restart their own federation using their existing balances,“ Woodfine said.
At the same time, NFTs generally have little to do with trading on centralized exchanges.