As a professional translator, I will provide an accurate and fluent translation of the news article, while maintaining a formal style and preserving proper nouns. The translation is as follows:
Blockstream, the company behind El Salvador’s Bitcoin bonds, plays a significant role in the world of Bitcoin.
In December of last year, the El Salvador Bitcoin Office (ONBTC) announced that the Bitcoin bond, known as the “Volcano Bond,” had been approved by the Salvadoran Digital Assets Council. It is expected to be issued in the first quarter of 2024 on the Bitfinex securities platform.
“The funds raised from the issuance of the bonds will be used to build a city called Bitcoin City, and this bond issuance will make El Salvador a new global financial center,” said Samson Mow, the former Chief Strategy Officer of Blockstream, at a meeting on El Salvador’s Bitcoin bonds in November 2021.
So, what role does Blockstream, the company behind El Salvador’s Bitcoin bonds, play in the world of Bitcoin?
In August 2021, Blockstream, a Bitcoin and blockchain infrastructure company, completed a $210 million Series B funding round and acquired the Israeli ASIC chip design team, Spondoolies. This marked Blockstream’s expansion from its original software-focused business to the upstream of the Bitcoin industry.
Before that, Blockstream’s commercial product line mainly focused on the Liquid sidechain ecosystem, Bitcoin mining-related services, and some data-related businesses. It aimed to provide extension modules and enhancements for the Bitcoin ecosystem.
Blockstream’s early product line mainly served institutions with its Liquid sidechain solution. Later, it also entered the consumer market by acquiring the Bitcoin wallet, Green Wallet. Blockstream also maintains and iterates several free product lines in the Bitcoin ecosystem, such as the Blockstream Satellite, a Bitcoin full node satellite network, the multi-signature wallet Blockstream Green, and the Lightning Network client, c-lightning.
However, although Blockstream’s involvement in Bitcoin Core’s development belongs to the forefront of software development, there is also the mining industry, which is part of the upstream of the entire Bitcoin industry. Therefore, Blockstream started offering Bitcoin mining services in early 2020 through partnerships with Norwegian listed company Aker, Square, and BlockFi.
Including the subsequent launch of the “Blockstream Energy” service, it aims to help energy producers sell excess electricity to miners and provide scalable energy solutions for power generation projects through Bitcoin mining, improving the efficiency of power generation and the economics of renewable energy projects, especially in remote areas globally.
In terms of chip manufacturing, Blockstream announced the acquisition of the intellectual property of Bitcoin mining hardware manufacturer Spondoolies during its public Series B funding round. The core team of Spondoolies will also join Blockstream and focus on ASIC chip design and manufacturing, filling the gap in Blockstream’s capabilities in this area.
In addition, Blockstream also launched the Blockstream Mining Note (BMN), a Bitcoin mining token for qualified investors, which circulates on Liquid. The mining facilities are located in Georgia, USA, and Quebec, Canada.
With the completion of its mining layout, Blockstream now covers almost all dimensions of the Bitcoin industry, including Bitcoin development, institutional services, and mining, forming a comprehensive product matrix.
The key core of Blockstream’s “Bitcoin toolbox” is “Liquid.”
“Liquid” refers to the Bitcoin sidechain mentioned earlier, which El Salvador plans to issue Bitcoin bonds on. It can be simply understood as a “Bitcoin-based smart contract layer.” It serves as a second-layer network of Bitcoin, allowing the issuance of security tokens and other digital assets. Its purpose is to provide financial products and services through the Bitcoin network and be used for financial asset settlement.
The current Bitcoin network ecosystem can be divided into four layers:
1. The main chain, which mainly handles the value system of Bitcoin, carries the decentralization and security of Bitcoin, and represents the values of the Bitcoin community.
2. The second layer, represented by the Lightning Network, focuses on enhancing the payment experience of Bitcoin through scalability.
3. The sidechain, where the smart contract functionality is mainly placed, integrates smart contract applications into the Bitcoin ecosystem.
4. Cross-chain, where almost all mainstream public chains introduce Bitcoin into their own ecosystems through cross-chain bridges. In their ecosystems, especially Ethereum, Bitcoin is used to develop related DeFi projects.
“Liquid” sidechain is also the core product of Blockstream. Although other products are interconnected, the Liquid network is prioritized as the most important product line. For example, the wallets developed by Blockstream will eventually connect to the Liquid network, so the profitability model of the wallets is secondary, and the focus is on growing the Liquid network.
In 2014, as Ethereum began its pre-sale and faced theft issues, and the Bitcoin scaling debate intensified, the attention of the entire crypto world was focused on these significant events that had a profound impact on the industry.
At the same time, Blockstream, which was founded just a few months prior, raised $20 million in Series A funding and clearly defined its project positioning – expanding the functionality of the Bitcoin protocol layer (sidechains).
The company had an impressive lineup, with Adam Back, the former HashCash developer, leading the team. Other members included Hammie Hill, an early developer of e-cash electronic cash and founder of zero-knowledge systems. HashCash and e-cash were foundational products of Bitcoin.
Additionally, Blockstream had an all-star development team, including Gregory Maxwell, Jonathan Wilkins, Matt Corallo, and Pieter Wuille, who would later become leaders in Bitcoin Core development. It also included Jorge Timon, the project lead of Freicoin, and former NASA engineer Mark Friedenbach, among others.
In the Bitcoin scaling debate, figures like Gavin Andresen and Bitmain were advocates for scaling, while Blockstream, represented by core developer Gregory Maxwell, was part of the opposing side.
The scaling advocates believed that the network congestion issue needed to be resolved immediately. Otherwise, as the user base grew further, payment delays would become significant, and transaction fees would skyrocket to alarming levels. This was unacceptable for Bitcoin, which aimed to be “electronic cash.” Gavin Andresen bluntly stated, “Rising Bitcoin transaction fees will drive the poor away from Bitcoin.”
On the other hand, the opposing side believed that congestion issues could and should be addressed in the long term through second-layer networks. They argued that scaling could only solve short-term congestion. As more people flocked to Bitcoin, it would have to continue scaling, which had no end in sight. Therefore, they advocated for keeping the Bitcoin network at 1MB and introducing off-chain solutions like Segregated Witness and the Lightning Network outside of the Bitcoin network.
The contradiction between the developers and mining representatives lay in the fact that they did not trust each other. Developers did not trust the mining representatives, believing that mining pools and large mining companies had taken control of the mining power, turning mining into a centralized commercial activity. They saw the existence of “mining hegemony” as destroying the decentralization of digital currencies.
On the other hand, mining representatives believed that once the Lightning Network was built, the majority of transactions would occur on the second layer, and the second layer would eventually become highly centralized, with transaction channels monopolized by central nodes. The underlying network would become the settlement channel for the second layer, and most people would never use the underlying network, contradicting Satoshi Nakamoto’s original vision for Bitcoin.
During the subsequent New York Agreement negotiations, due to various conflicts, Samson Mow, who represented Bitcoin Core and Blockstream, was excluded from the meeting.
The subsequent debates and conflicts over the roadmap are well-known, with the Pandora’s Box of Bitcoin forks, such as Bitcoin Cash (BCH), being opened, making it difficult to undo the situation.
Blockstream has publicly disclosed its funding information three times before, including a $21 million seed round in November 2014, a $55 million Series A round in February 2016, and a strategic investment from Digital Garage (DG Lab Fund), the specific amount of which was not disclosed in November 2017.
It should be noted that Bitcoin Core is an open-source project responsible for maintaining and releasing the Bitcoin client software “Bitcoin Core” (including full node validation and Bitcoin wallets) and other related software maintenance work.
Among the core developers and contributors involved in the Bitcoin Core project, a significant number are employees of Blockstream who receive salaries from the company to support their development work. This has sparked debates and concerns about the independence of Bitcoin Core developers. Some community members question whether Blockstream’s commercial interests are influencing the development of the Bitcoin protocol, with some even stating that “Blockstream controls the Bitcoin code.”
“Based on the fact that Ethereum cannot build a truly decentralized financial system, it is only possible to achieve this through Bitcoin, the Lightning Network, and Liquid,” Blockstream can be seen as the most influential “KOL organization” in the Bitcoin community. Both the CEO, Adam Back, and COO, Samson Mow, take pleasure in criticizing the Ethereum community.
Adam Back once replied to someone’s message by saying that Ethereum is similar to a Ponzi scheme, while Vitalik Buterin believes that Ethereum is rising, and the tides of history are not favorable to Bitcoin maximalists.
In the subsequent debate between Samson Mow and Vitalik, there were even accusations of mutual harm between Ethereum and Liquid. Samson Mow stated, “No one will build any secure (e.g., financial) systems on the Ethereum platform. If you want tokens, you can issue them on the Liquid network, and you can thank me later.”
To some extent, Blockstream represents the entire Bitcoin community, including the Bitcoin scaling debate, the Lightning Network and sidechain solutions, and the competition with cryptocurrencies like Ethereum. It is a complex web that is difficult to untangle.