A beginner’s guide to understanding the layers of blockchain technology

A beginner’s guide to understanding the layers of blockchain technology

A beginner’s guide to understanding the layers of blockchain technology

Understanding the layers of the blockchain technology

If you’ve researched cryptocurrency or blockchain in any way, you’ve probably come across terms like layer one and layer two protocols. Curious about what these layers are and why they exist? In this article, let’s talk about the blockchain layer architecture. Blockchain technology combines current technologies (cryptography, game theory, etc.) with various possible applications, such as B. Cryptocurrencies. A mathematical and computational discipline, data encoding and decoding called cryptography.

Game theory studies mathematical representations of the interactions between rational decision-makers in strategic situations. By offering transparency and security, blockchain cuts costs, eliminate intermediaries and increases efficiency.

Without oversight from a central authority, distributed ledger technology (DLT) maintains cryptographically verified information among users who agree on a predetermined network protocol. The mixture of these technologies raises trust between people or parties who otherwise have no reason. They enable blockchain networks to exchange values ​​and data between users securely. Due to the lack of a central authority, blockchains must be very secure. They must also be highly scalable to handle user growth, transactions, and more. Data.

The tiers were born from the need for simultaneous scalability while maintaining the highest level of security.

What is blockchain scalability?

The term “scaling” in blockchain technology refers to an increase in the throughput rate of the system, measured in transactions per second. With the widespread adoption of cryptocurrencies in everyday life, layers of the blockchain are now required to enhance network security, record-keeping, and other functions. The number of dealings a system treats per second is called “throughput.” While the VisaNet electronic payments network from Visa can process more than 20,000 transactions per second, the main chain of Bitcoin (BTC) can process up to seven transactions per second. The blockchain is the first layer in a decentralized ecosystem.

Layer Two is a third-party integration used with Layer One to increase the number of nodes and, therefore, system performance. Many Layer 2 blockchain technologies are currently being implemented. Smart contracts are used in these solutions to automate transactions.

Blockchain developers are looking to expand the scope of blockchain management as Bitcoin becomes a more significant force in the trading world. They hope to decrease processing times and increase TPS by developing layers of the blockchain and optimizing the scalability of layer two.

The blockchain trilemma

The blockchain trilemma refers to the common notion that decentralized networks can only offer two benefits in terms of decentralization, security, and scalability. Computer scientists in the 1980s developed consistency, Availability, and Partition Tolerance (CAP) to express perhaps the most important of these difficulties. The CAP theorem states that a decentralized data storage like blockchain can only fulfill two of the above three guarantees simultaneously. This theorem has become the blockchain trilemma in the context of today’s distributed networks. It is widely believed that public blockchain infrastructures must sacrifice security, decentralization, or scalability.

As a result, the holy grail of blockchain technology is to create a network with impenetrable security on a largely decentralized network while still handling transaction performance at the internet level. Before delving into the dynamics of the trilemma, let’s define scalability, security, and decentralization in general: Blockchain scalability refers to its ability to handle a higher volume of transactions. Security refers to the ability to protect data on the blockchain from various types of attacks and protect the blockchain from double-spending. Decentralization is a type of network idleness that confirms that fewer entities do not control the network.

Can the blockchain trilemma be solved?

The problems of distributed data storage that gave rise to blockchains were carried over to blockchains. To better understand these difficulties and their problems, the term “blockchain trilemma” was coined to summarize them. Although the word “trilemma” has gotten around, the blockchain trilemma is merely a guess. This hypothesis is believed to be correct based on early data but has not been proven or disproved. More research is required, although the Layer One and Layer Two solutions have seen some success.

The bottom lines

One of the reasons why the mainstream adoption of cryptocurrencies in the blockchain business is now impossible is scalability. As the demand for cryptocurrency grows, so does the pressure to expand blockchain protocols. Since both layers of the blockchain have limitations, the solution is to develop a system that can solve the scalability trilemma. Layer one is vital as it helps as the foundation for decentralized systems. The underlying scalability issues of the blockchain are addressed through Layer Two protocols.

Unfortunately, most layer three protocols (DApps) currently only run on layer one and skip layer two. Unsurprisingly, these systems do not work as well as we would like. Layer 3 applications are essential because they help develop real-world use cases for blockchains. However, unlike legacy networks, they will yield less value than their base blockchain.

Share to Social Media

Recent Articles

Join Our Newsletter