Lightning versus the Liquid network

[_act_]

I have preferred to just go for the lightning network but I have been seeing some posts about liquid network recently. It is L-BTC which also has low transaction fee like the lightning network but I have not been using it because I do not consider it as bitcoin.

Lightning network is BTC. I know this.
Liquid network is L-BTC which I always see as an altcoin.

Is the liquid network bitcoin or altcoin?

[BlackHatCoiner]

It's an altcoin. However, it's a good one.

What's a "good altcoin"? One which can influence Bitcoin, and make it better.

[d5000]

I don't like the federated sidechain model, for this reason I consider L-BTC even worse than a (decentralized) altcoin. It is maybe better than completely centralized coins like BNB and XRP but not by much. I would place it in a very similar category than Ethereum's wBTC.

In theory, the Liquid federation could simply set up a Paypal-like IOU service. The incentive model (the incentives for or against the custodians to steal BTC) would be more or less the same. The blockchain (sidechain, in this case) has at least one small advantage: it makes the IOU structure more transparent. But it still is an IOU structure. It's extremely unlikely that the Liquid Federation will cheat, but they are not really better than a bank.

Lightning is completely different, as in this case the Bitcoins are owned by the users themselves, there is a way to unilaterally exit the system, and there is a clear punishing mechanism if some party misbehaves.

I read however that Liquid is investigating a transition to a slightly more decentralized structure. In this case it could become interesting for me. But it still isn't there. The DynaFed update from 2021/22 isn't really a dynamic federation as the original members are still in control and they can't be "driven out" by new federation members. It's a top-down mechanism, even dPoS is more decentralized.

[Kruw]

Is the liquid network bitcoin or altcoin?

It's a bank that stores Bitcoins, and this bank has useful tools for making transfers.

[kotajikikox]

Lightning network is BTC. I know this.
Liquid network is L-BTC which I always see as an altcoin.

Is the liquid network bitcoin or altcoin?

I do not entirely consider it as an altcoin as it is not totally separate from bitcoin main chain.

At best it is a token but since it is still connected to bitcoin, I would not consider it as an altcoin. I can compare it to ethereum's many networks. It is still ethereum but in different networks so that you can avoid the high gas fees of ethereum main chain.

[_act_]

It's a bank that stores Bitcoins, and this bank has useful tools for making transfers.

If it is bitcoin, why not call it BTC. It is called L-BTC. Lightning network is also another layer which is called offchain layer but it is still called BTC. BTC is BTC and not L-BTC. But BTC is pegged with L-BTC.

I do not entirely consider it as an altcoin as it is not totally separate from bitcoin main chain.

It is totally separate from bitcoin blockchain. But not only that, it is not also included in any of bitcoin BIP.

At best it is a token but since it is still connected to bitcoin, I would not consider it as an altcoin. I can compare it to ethereum's many networks. It is still ethereum but in different networks so that you can avoid the high gas fees of ethereum main chain.

There are many other coins that are altcoins but pegged with bitcoin.

[vjudeu]

If it is bitcoin, why not call it BTC.

Because Lightning Network is trustless. However, if you have a federation, and initial signers are still needed, then that federation is far from being trustless. You cannot even change them, so it is the same problem, as with "signet challenge": once deployed, you are doomed to live with it (of course, it is possible to add some better mechanism, and then compromise initial keys, but nobody is planning those kinds of actions in the near future).

But not only that, it is not also included in any of bitcoin BIP.

When it comes to LN, some people think, that LN-related improvements should be also BIPs. But well, LN by itself, is far from being added into Bitcoin Core, so as long as it is the case, there is no strong incentive to make BIPs like that.

There are many other coins that are altcoins but pegged with bitcoin.

In which ratio they are pegged? 1:1? Some other constant? Because if it is just UTXO-based, and it contains only some dust, no matter how many ALTs are created, then it is far from being "pegged", because there is no "peg", if you can produce new coins, out of thin air, and if there is no fixed BTC:ALT exchange rate (in LN, it is 1:1000).

[Kruw]

If it is bitcoin, why not call it BTC. It is called L-BTC.

Because BTC refers to something you control yourself.

Lightning network is also another layer which is called offchain layer but it is still called BTC.

Yes, Lightning is still "BTC", but your ownership of it is conditional on you keeping track of presigned transactions and broadcasting them before a timelock expires.

[ABCbits]

Is the liquid network bitcoin or altcoin?

Neither, i would say it's federated Bitcoin sidechain. Liquid network only peg Bitcoin and doesn't have it's own coin either.

It's a bank that stores Bitcoins, and this bank has useful tools for making transfers.

If it is bitcoin, why not call it BTC. It is called L-BTC.

Because only federation member can perform peg-out (convert L-BTC to BTC), even though you can perform peg-in (BTC to L-BTC) by yourself.