“The security offered by the Bitcoin network is the final say in the Liquid system. Bitcoin can be sent to the Liquid sidechain, moved freely within it, and then withdrawn back to the Bitcoin network when desired.” – URL
Blockstream’s solution is promising IMHO, as we do need more than one blockchain to handle all of the world’s transactions. This project is categorized as a “private” blockchain, which means that the “owners” of the system (the nodes voting on the status of the chain) needs protection by secrets handled by humans, so it’s not a secure as the main chain (Bitcoin) – still it can be of value to the involved parties (using a Robin round type voting system). And the current systems handling the fiat transactions of the world is already protected in similar ways. That cost (for protection) will not diminish considerably, but the involved parties can settle their transactions between themselves much faster than today’s banking/SEPA/SWIFT system does. We’ll see if this one (or a similar one) gets hacked (maybe even internally by someone at one of the participators) – and then maybe the Lightning network is ready to step in. In any case participation in this project is voluntary (and Blockstream gets paid for it) so I don’t see much point in arguing against it. It is an interesting experiment in any case, whether successful or not. And it’s great to finally see a “sidechain” example becoming a real commercial service.
According to the announcement Liquid will provide customers the option of arbitraging between exchanges, which should even out rates between them, maybe also stabilizing the overall Bitcoin exchange rate vs. the USD in the longer run, if the liquidity is large.
Also, these kinds of developments strengthens the idea of having bitcoins as the “reserve currency” – the basis for other digital assets, which I believe is the safest way forward.