Is Liquid Sidechain a Path for Better Bitcoin Privacy?

Although Bitcoin (BTC) first hit the mainstream as a sort of anonymous Internet currency that allowed people to order drugs via darknet markets like Silk Road, the reality is transactions made on the network are completely public. Indeed, the current level of privacy offered by Bitcoin and many other cryptocurrency networks is far from ideal, although there have been a number of improvements, such as CoinJoin, implemented over the years.

While the nature of Bitcoin makes it difficult to implement changes quickly, some developers think the Liquid sidechain built on the Bitcoin network by Canada-based major blockchain company Blockstream has the potential to improve privacy for BTC users. However, others see the sidechain, which runs on a model of “federated custody,” as mostly uninteresting from a cypherpunk perspective.

Though the Lightning Network has received much more attention as an additional protocol layer for Bitcoin over the past few years,…