🟧Understanding Bitcoin Layers

GitBook tip: your product docs aren't just a reference of all your features! use them to encourage folks to perform certain actions and discover the value in your product.

Lets Breakdown the Current Layers on Bitcoin

Bitcoin as a layer-1!

Understanding the foundation is key! Bitcoin is an innovative payment network and a new kind of money. However its more than that and operates solely as its own network, a layer 1. The current issues found with building on bitcoin directly is that the fees are expensive and the transaction net time is inefficient. This is why Layer-2 are built, So lets dive a little deeper to understanding that concept.

What are Bitcoin Layer-2 ?

A layer 2 refers to a set of off-chain solutions (separate blockchains) built on top of layer 1s that reduce bottlenecks with scaling and data. This allows for a higher throughput scalability, lower offset fees per transactions and allows for an entire ecosystem to be built on that layer. Whilst the Layer 1 scaling involves improving the base layer of the blockchain, which includes changing the protocol to allow for faster speeds and increased scalability, the layer 2 scaling, on the other hand, involves building on top of the existing blockchain

Bitcoin Layer-2s are protocols built on top of Bitcoin’s base layer, developed to provide scalability to the Bitcoin network by processing transactions off the main blockchain.

Major Bitcoin scaling solutions today include Lightning Network, Rootstock, Stacks, Liquid Network, and rollups (validity and sovereign).

Last updated