Raretoshi, a new non-fungible token (NFT) and physical art marketplace built on the Liquid Bitcoin sidechain, has been announced today by Blockstream, according to a press release sent to Bitcoin Magazine.
“Raretoshi provides all the tools necessary for Bitcoin artists to list their digital or physical art projects for auction or instant purchase,” reads the release. “Art, in the form of images or even videos in MP4 format, can be uploaded to Raretoshi and a corresponding NFT will be minted seamlessly using Liquid’s native asset issuance feature.”
An NFT is a unique token on a blockchain. This is unlike fungible tokens like bitcoin, which are interchangeable — every satoshi is equivalent to every other satoshi. NTFs certify the uniqueness of a digital asset, which can represent items such as photos, videos and audio files. Access to copies of the NFT is not restricted, but the original owner can prove their rightful ownership of the original asset.
Raretoshi brings NFTs to Bitcoin by leveraging the Bitcoin sidechain Liquid network, which allows for lower-fee artwork minting and gives the artists the option to receive royalties for the resale of their art.
“Potential buyers can bid on an auction or instantly purchase the art with Liquid Bitcoin (L-BTC) or other Liquid-based stablecoins like USDt and L-CAD,” according to the release. “Transactions on Raretoshi take advantage of Liquid’s atomic swap features — the exchange of Liquid assets and NFTs is completed in the same on-chain transaction, minimizing trust on either side of the trade.”
A sidechain is an independent blockchain that runs parallel to another blockchain, allowing for tokens from that blockchain to be used securely in the sidechain while abiding by a different set of rules, performance requirements and security mechanisms.
Liquid is a sidechain of Bitcoin that allows bitcoin to flow between the Liquid and Bitcoin networks with a two-way peg. Bitcoin used in the Liquid network is referred to as L-BTC, and its verifiably equivalent amount of BTC is managed and secured by the network’s members, called functionaries. The use of functionaries can be interpreted as requiring trust in third parties.
Additionally, this restricted group of functionaries also function as block signers. The network’s federation structure includes participant members and full nodes. Participants can peg-out (move funds from Liquid to Bitcoin) and vote on board elections and network updates. Full nodes can ensure functionaries’ correct behavior by verifying transactions and peg-ins. However, only functionaries have the power to secure the network.
Besides allowing the issuance of assets, Liquid also provides confidential transactions and more rapid transfer of funds. But because only a predetermined subset of members can help secure the Liquid network, the federated sidechain is very much different from Bitcoin and its main software client — Bitcoin Core. With Bitcoin Core, any node is allowed and welcomed to help secure the network by becoming a mining node.
Liquid’s federated model, on the other hand, prevents the broader public from actively contributing to the network’s security. Moreover, Liquid brings three features at the cost of trusting that the majority of the federation remains honest, something that makes it vulnerable to censorship and goes against some principles of Bitcoin.