The buzz around blockchain technology and cryptocurrencies seem to never end as developers are in the habit of creating yet another buzzword while one seems to be getting the attention of the global space.
The difficulty in keeping up with these new products and concepts is what has made newbies in the crypto space perceive blockchain technology and cryptocurrencies as a myth and something that can be termed difficult to understand.
This article aims to demystify the concepts around the various layers of blockchain solutions for everyone to grasp the concept in a Klever and simple way.
What is blockchain?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.
This can also be a set of distributed databases that are shared among different computer nodes across a global network.
Such that each block within the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger.
This can be in the form of digital data that can range from all forms of items like the data generated from the number of shoes produced by major shoe manufacturers across the world, or the number of cars produced around the globe.
There are a lot of data that can be generated and distributed globally to help fight crime and criminality too. This is just one use case of blockchain technology and its potential to solve global problems.
However, there is the need to scale the various blockchains to accommodate more services and ensure the speed of transactions at the least possible cost.
What is the scaling of blockchain?
The term “scaling” in blockchain technology refers to an increase in the system throughput rate, as determined by the number of transactions performed per second.
In other words, it’s the ability to “handle the pressure” when things get very popular and a lot of users are transacting at the same time.
The significance of scaling in the blockchain ecosystem has gradually become more necessary as blockchain adoption is gradually gaining momentum in almost every field of life.
Consequently, with the help of subtle improvements in the system throughput rate, blockchain networks can accommodate new applications and an increased volume of transactions, thereby achieving the goal of scalability required for the efficiency of the blockchain, which includes the network security, and record-keeping, and other purposes.
What is a Layer-1 blockchain?
Layer-1 simply refers to the base blockchain architecture developed to accommodate other nodes and decentralized applications.
A typical example of a layer-1 blockchain is the Ethereum blockchain.
This is described in some quarters as the 8th wonder of the world because of the inherent abilities that are associated with the Ethereum blockchain.
The layer-1 blockchain has the capability to integrate several other applications on it and also serve in various capacities.
What is a Layer-2 blockchain?
Layer-2 blockchain works on the native layer of the layer 1 blockchain, where it operates on a state channel model in some cases.
This is a two-way communication channel between participants, which enables them to conduct interactions that would typically occur on or off the blockchain in other cases.
The implementation of the layer-2 blockchain would help in cutting down the waiting time or confirmation time as you are no longer dependent on a third party like a miner for the validation of the transaction.
In a simple but concise tabular representation, you can get all this information in the table below.
|Implication||Layer-1 scaling solutions are changes to the blockchain network’s base protocol that improve scalability.||To improve scalability, layer-2 scaling solutions make use of off-chain services or networks.|
|Working||Changes to the base protocol, like bigger block sizes or new consensus mechanisms. It can facilitate scalability.||Off-chain solutions improve scalability by sharing the transaction ordering and processing workload.|
|Types of improvement in blockchain||Consensus protocol improvements |
Sharding changes in block sizes
|Nested blockchain state channels sidechain|
|Example of Blockchain||Bitcoin, Ethereum DigiBytePolkadot||Matic (Polygon)OmiseGo (OMG)|
Why do we need layer-2 blockchains?
The most significant challenge associated with the widespread adoption of cryptocurrencies is scalability.
This has been observed in the past as a result of large congestion on the various layer-1 blockchain protocols.
However, to ensure that cryptocurrencies are scalable and quick enough during the day transactions, we need protocols designed specifically to address this issue of scalability.
The Klever team for instance has not rested on its present stage of development, which has helped to further improve on the development of the KleverChain.
The idea is to cater to most of the challenges experienced by some of these blockchains when it is finally launched in a couple of days.