 What a liquid sidechain asks David, looks like it's a private blockchain, but claimed to be having some degree of decentralization. If it did work, what does it mean to Bitcoin community and other sidechain projects, either public or private? First of all, Liquid is a product name. It's a creation of a company called Blockstream. A company that has a number of projects in the Bitcoin space, and also hires and pays a number of core developers, who are working on the Bitcoin Core protocol and the Bitcoin Core client. Blockstream announced this a long time ago, probably two or three years ago. They have hired some of the developers who came up with the initial idea of a sidechain. The sidechain is a separate blockchain that has a two-way peg, whereby you can move money from Bitcoin to this other blockchain, use it in this other blockchain, and then move it back. This uses a trustless two-way peg. In the case of Liquid, the purpose of Liquid, which is the first sidechain implementation by Blockstream, and has been in beta or trial stage for more than a year now, is intended to be like a back-end exchange-to-exchange pipeline for Bitcoin transfers, allowing Bitcoin to move very fluidly between exchanges without having on-chain transactions. The idea being that you have exchanges around the world, and they have to withdraw on deposit Bitcoin, to addresses that belong to other exchanges, and every time they do a withdrawal or deposit, they're not only using up space on the Bitcoin blockchain, but they also have to pay fees in order to do that. Liquid is intended to be essentially a payment channel between exchanges that allows them to move money between themselves directly. Kind of like a Swift network for Bitcoin, one of the things about Liquid is that it uses a federated signing model. It's not a mind-chain, instead it's a signed chain, so it uses what some people call a proof-of-authority, or a federated signing model, where there are some privileged nodes within the system that vet and manage the consensus rules on that sidechain, and they secure that blockchain by signing blocks and taking turns signing blocks. There is a degree of decentralization compared to a centralized provider like Swift, but there isn't the degree of decentralization you have in a completely decentralized and open blockchain that has a proof-of-work algorithm behind it, for example. On the liquid sidechain, what you're actually moving around is Liquid BTC, which is one-to-one equivalence of Bitcoin. You lock up one Bitcoin on the Bitcoin blockchain, and then that becomes one LBTC, or liquid Bitcoin, that can move on the liquid sidechain, presumably at faster speeds with lower transaction costs and without burdening the Bitcoin blockchain. At any point in time, you can move one Bitcoin back to one Bitcoin at a one-to-one exchange rate. That's the basic idea. This is not for end-users, this is not for consumers. There have been some discussions about opening it up to others, but this is something for exchanges to manage very large flows of Bitcoin between themselves in a network that's off-chain. It's a commercial product, so it has fees. As far as I understand, the fees are for the providers of the security on this system. Jerry asks, does the Bitcoin liquidity, I think he means liquid, compete with Ripple, XRP, for use-case scenarios? Does the liquid sidechain, which is the sidechain created by Blockstream, compete with XRP for use-cases? I don't think so. Part of the reason for that is, from what I understand, XRP has a very different model in both its consensus layer, as well as in how the currency is used within the network than liquid. I think people who are interested in XRP are not interested in Bitcoin, even if it is implemented through a liquid sidechain. But there is a spectrum of applications here, whether it is going from payment channels in a lightning network, or just raw payment channels and atomic swaps, a sidechain-like liquidity, or XRP. There is some overlap in some of those applications. I don't think that overlap is enough to make these systems compete directly against each other. I think they differentiate enough that they don't directly compete. Do sidechains inherit any of the security properties of the main blockchain they are connected to, or are they completely independent? If not, how can we trust them? That's a great question, Frank. It depends on the implementation of the sidechain, but in many cases, a sidechain is simply another blockchain that has a way to transfer value from another blockchain. You have two blockchains that are operating in parallel, side by side. You can't really say one is a sidechain of the other, any more than the other is a sidechain of the first. They are both sidechains to each other, but they are both independent blockchains. You have mechanisms which involve cross-blockchain transfers, forms of atomic swaps, pegging, and things like that, that allow you to move value from one to the other. That doesn't mean they are not independent blockchains. Then the question is, what are the consensus rules by which the blockchain is secured? A sidechain is a blockchain, and it has some consensus rules. Maybe it runs with proof-of-work mining, maybe it runs with proof-of-stake, maybe it has a federated proof-of-authority signing mechanism. Whatever the case may be, it will have the security characteristics that these consensus mechanisms bring to it. If you took two proof-of-work blockchains with substantial hashing power behind them and made them sidechains of each other, they would have different characteristics than if you connect a proof-of-work blockchain like Bitcoin, with a lot of hashing power behind it, and a sidechain that has either a very small amount of mining or a different consensus mechanism. How can we trust them? You can trust them if you understand their security model, and you think that security model is strong enough. But they don't really inherit the security of the other chain. There are some exceptions to that, which have to do with merge mining, where both chains are mined together. But those exceptions don't change the rule. Why have sidechains being overshadowed by other crypto projects like Ethereum for contracts and polymath for security tokens? Part of the reason is that we haven't seen a successful and popular implementation of sidechains. Sidechains are relatively recent technology. Many of the underlying requirements, although sidechains were proposed four or five years ago, many of the underlying technology only recently entered into the various blockchains in order to make sidechains possible. I think probably only two have launched so far that I know of Rootstock and just this week, Liquid. But other than that, we haven't really seen broad use, and both of those are still in beta stage. That's why sidechains may not be as popular as completely separate blockchains that have been bootstrapped with their own consensus layer and operate with their own security. I hope that answers your question, Tamara.