What are Layer 1 and Layer 2 blockchains ?

Blockchains are decentralized digital ledgers that record transactions on a distributed network of computers.

They can be divided into two main categories: Layer 1 and Layer 2

What is Layer 1 Blockchain ?

Layer 1 blockchain refers to the underlying infrastructure of the blockchain, such as the Bitcoin or Ethereum networks. These are also known as “base layer” or “first layer” blockchain because they provide the foundational technology for other layers to build upon. Layer 1 blockchain networks are decentralized, meaning that they are not controlled by any single entity. They use consensus mechanisms, such as proof-of-work or proof-of-stake, to validate transactions and add them to the blockchain.

What is Layer 2 Blockchain ?

Layer 2 blockchain, on the other hand, refers to additional layers built on top of the layer 1 infrastructure. These layers are designed to improve the scalability, privacy, and security of the blockchain. Examples of layer 2 solutions include the Lightning Network for Bitcoin and the Plasma framework for Ethereum. These solutions allow for off-chain transactions, which are settled on the layer 1 blockchain only when necessary. This can greatly increase the number of transactions that can be processed per second, reducing the time and cost of transactions.

In summary, layer 1 blockchain provides the foundation for the blockchain network, while layer 2 blockchain builds upon this foundation to improve scalability, privacy, and security. Both are important for the growth and development of blockchain technology.