As layer 1 blockchains, Bitcoin and Ethereum, have always been plagued by the 'Blockchain Trilemma'. This means that, one of three features (scalability, decentralization & security) needs to be sacrificed for the blockchain to function efficiently.
For instance, on the Bitcoin and Ethereum Blockchains, scalability is traded for security and decentralization. So, while data is stored in a secured distributed ledger, these blockchains suffer in terms of transaction speeds, especially as the number of users on the network increases.
Bitcoin has a transaction per second (TPS) speed of 7, whereas Ethereum has a TPS of 15. These are extremely slow compared to other payment services like Visa, which has a TPS of 45,000. Developers have turned to layer 2 solutions to address this gulf in processing speeds.
layer 2 is a collective term used to describe blockchain scaling solutions. These solutions are built on top of the layer 1 blockchain and help improve the network's scalability and transaction processing speed. They are merely an extension of the base layer. They inherit the features of the layer 1 blockchain and build on them to improve the efficiency of the network.
Let's dive in deeper to understand the meaning of layer 2 solutions and how they work.
Continue reading: https://www.cnbctv18.com/cryptocurrency/what-is-a-layer-2-blockchain-13267932.htm
For instance, on the Bitcoin and Ethereum Blockchains, scalability is traded for security and decentralization. So, while data is stored in a secured distributed ledger, these blockchains suffer in terms of transaction speeds, especially as the number of users on the network increases.
Bitcoin has a transaction per second (TPS) speed of 7, whereas Ethereum has a TPS of 15. These are extremely slow compared to other payment services like Visa, which has a TPS of 45,000. Developers have turned to layer 2 solutions to address this gulf in processing speeds.
layer 2 is a collective term used to describe blockchain scaling solutions. These solutions are built on top of the layer 1 blockchain and help improve the network's scalability and transaction processing speed. They are merely an extension of the base layer. They inherit the features of the layer 1 blockchain and build on them to improve the efficiency of the network.
Let's dive in deeper to understand the meaning of layer 2 solutions and how they work.
Continue reading: https://www.cnbctv18.com/cryptocurrency/what-is-a-layer-2-blockchain-13267932.htm
