Blockchain technology and cryptocurrencies have come a long style since their cosmos, etching themselves a place in the global economy. However, these technologies still demand to overcome several challenges before their widespread adoption, namely the scalability problem, although some intended solutions are already being proposed. These come in the form of blockchain layer i and layer two solutions.
Only, what is this scalability problem? And, what exactly are blockchain layer 1 and layer ii solutions?
The Scalability Trouble
Inside the blockchain and crypto world, scalability refers to a blockchain's power to scale up the number of transactions it can procedure at a unmarried time, adjusting to user demand. When you talk nearly a blockchain's scalability, you lot are talking essentially about transaction speed. The scalability problem is the result of various challenges present in the realization of the platonic blockchain, which ought to be decentralized, secure, and scalable.
These challenges have been summed up and conceptualized as the "blockchain trilemma" by Ethereum'due south co-founder, Vitalik Buterin. The blockchain trilemma posits that while the platonic blockchain should be decentralized, secure, and scalable, information technology can merely accept ii out of the iii characteristics.
The blockchain trilemma represents 1 of the technology's major challenges to its widespread adoption. It should still not be taken equally a given, though, every bit there is no actual law preventing the technology from being improved and reaching a desired level of scalability without the demand to sacrifice neither decentralization nor security.
There are really many teams of developers working difficult to solve the blockchain trilemma, with some techniques and ideas that intend to solve the scalability problem, even if partially, already existence implemented. These ideas and techniques come in the form of either layer 1 or layer 2 solutions, depending on their level of implementation regarding the blockchain.
What Are Blockchain Layers?
In the crypto world, and particularly when you talk of scaling solutions, blockchain layers refer to the level of implementation of scaling solutions; whether they are implemented directly on the blockchain or if they part atop of information technology as a dissever, but dependent, protocol or network.
What Is Blockchain Layer 1?
Blockchain layer ane refers to the distributed database itself, the peer-to-peer network that brings all the blockchain's nodes together into a single system, and its underlying consensus mechanisms. For example, Bitcoin'southward layer 1 is the Bitcoin network, Ethereum's is the Ethereum network, and Ripple's is the XRP Ledger.
Blockchain layer 1 scaling solutions:
- Increasing cake-cosmos speed.
- Increasing cake-size.
- Consensus protocol changes, irresolute the core rules nodes must follow to be admitted into the network and the mechanisms the network follows to observe consensus amid the nodes.
- Sharding, breaking blocks of transactions into smaller shards, and processing simultaneously by the blockchain, allowing information technology to process several transactions at a unmarried time.
What Is Blockchain Layer 2?
Blockchain layer two refers to the intended scaling solutions, such as protocols or networks, that operate atop a blockchain, essentially functioning as different layers of blockchain. For instance, Bitcoin's Lightning Network or Ethereum's Plasma, Polygon, and and then on.
Blockchain layer two solutions:
- Nested networks: In this kind of network, the main blockchain, called the "mainchain," sets the rules for the whole network and is non expected to participate in whatever functioning unless there is the need for resolving a dispute. This system allows several levels of blockchains to be congenital on top of each other, linking them through a parent-child connectedness. The parent chain assigns and distributes the tasks among its children, who in turn execute them and send back the result to the mainchain, relieving their parent of its workload and increasing scalability.
- State channels: These create a ii-way communication channel between the blockchain and off-concatenation transactional channels. When using country channels, transactions occur off the blockchain, thus, they practice not crave node verification. Instead, state channels rely on smart contracts to finalize transactions.
Layer 1 vs. Layer 2: Solving Blockchain Scalability
Even though the blockchain trilemma continues to exist a thorn at the side for both blockchain technology and cryptocurrencies, developers keep to piece of work difficult on solving the scalability problem and are coming up with new solutions past the day. There is ample room for experimentation.
If the blockchain trilemma is as well limiting for an on-chain, layer 1 solution, developers have proven that off-chain, layer 2 solutions can offering an efficient alternative.