What is Layer 1: The Backbone of Blockchain Technology
Have you ever wondered what drives the sophisticated world of cryptocurrencies? The answer lies in the bedrock on which everything else is built: Layer 1 blockchains. These technical powerhouses represent the entire soul of the cryptocurrency ecosystem.
This article will walk you through the secrets of Layer 1 blockchains, their distinguishing qualities, the key participants in this field, and the game-changing breakthroughs that are altering the future of finance and technology.
Explaining Layer 1 Blockchain
Before jumping into the Layer 1 blockchain, let’s first define what a blockchain is. It is a shared digital ledger that everyone can access, similar to how people can access a Google Doc. Each transaction creates a new record in this ledger, which is validated and protected by a network of computers.
Layer 1 blockchains are the foundation of this technology, setting the fundamental rules and protocols that govern how the ledger operates. Picture it as the foundation of a home, essential for sustaining everything else. They are in charge of processing transactions, maintaining consensus, and protecting the network from threats.
Read to understand more about blockchain layers.
Key Features Of Layer 1 Blockchains
Layer 1 blockchains have many significant elements that contribute to their functioning and value, including:
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Smart contracts: These are self-executing contracts whose terms are directly stated in code. They automate procedures, remove middlemen, and allow the development of decentralized applications (dApps).
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Security: Layer 1 blockchains rely on cryptographic algorithms and consensus procedures to maintain transaction integrity.
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Consensus mechanism: This establishes how the network agrees on transaction legitimacy and maintains the blockchain's consistent state. Common approaches include Proof-of-Work (PoW) and Proof-of-Stake (PoS).
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Scalability: The capacity to handle high volumes of transactions swiftly and effectively is critical for wider adoption. Layer 1 blockchains are always striving to increase scalability while retaining security and decentralization.
Top Layer 1 Blockchains You Should Know
Layer 1 blockchains serve as the cornerstone of the cryptocurrency world, each with its own set of features and functions. Let’s explore some of the most significant Layer 1 initiatives driving blockchain innovation below.
Major Layer 1 Blockchains
The following are the most prominent Layer 1 blockchains that every crypto enthusiast should know about:
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Bitcoin (BTC): As the first cryptocurrency, Bitcoin runs on its own Layer 1 blockchain, which uses the Proof-of-Work (PoW) consensus mechanism to provide safe, decentralized transactions and value transfers.
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Ethereum (ETH): The Layer 1 blockchain of Ethereum transformed the field by offering smart contracts and decentralized applications (dApps). It is actively moving to a Proof-of-Stake (PoS) consensus process to increase scalability and efficiency.
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Solana (SOL): Solana tackles the scalability issues of previous Layer 1 blockchains by using a Proof-of-History (PoH) consensus method, allowing for rapid transaction rates and lower fees. This explains why SOL is ideal for decentralized finance (DeFi) applications.
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Polkadot (DOT): Designed for interoperability, Polkadot enables various blockchains to connect and exchange data effortlessly. Its unique shared security approach and Nominated Proof-of-Stake (NPoS) consensus mechanism promote an interconnected environment.
The universe of Layer 1 blockchains extend far beyond the above. There are several networks that address the blockchain trilemma of decentralization, security, and scalability in their own unique ways. Elrond (EGLD), Harmony (ONE), Kava (KAVA), THORChain (RUNE), Celo (CELO) and IoTeX (IOTX) are a few notable ones.
Major Drawbacks Of Layer 1 Blockchains
Despite their potential, Layer 1 blockchains confront obstacles, often known as the "blockchain trilemma". This relates to how difficult it is to achieve great scalability, security, and decentralization all at once. Below are some notable drawbacks you should be aware of:
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Increasing block size: Larger blocks can process more transactions, but they take up more storage and bandwidth, possibly centralizing the network.
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Changing the consensus mechanism: Switching to a more efficient consensus method, such as PoS, might increase scalability but jeopardize security and decentralization.
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Sharding: This refers to the technique of breaking the blockchain into smaller chunks (shards) that are handled separately by various nodes in order to boost throughput. However, sharding increases complexity and poses security issues.
Layer 1 vs Layer 2: Head-To-Head Matchup
Layer 1 and Layer 2 blockchains use distinct ways to tackle the difficulties of scalability, security, and decentralization in the blockchain ecosystem. The table below summarizes the major distinctions between these two kinds of blockchains:
| Native Token |
Required for transaction fees and network participation (e.g., staking for consensus). |
Not essential, often used for governance or specific L2 features. |
| Gas Fee Payment |
Paid exclusively in the native L1 token. |
Some L2s use ETH for gas fees, others use their native token (e.g., MATIC on Polygon), or a combination. |
| Gas Fee Cost |
Significantly higher, especially during periods of network congestion. |
Generally lower due to off-chain processing and various scaling techniques. |
| Security |
More secure due to higher decentralization, making them more resistant to attacks but potentially less efficient. |
Less secure because of the higher centralization, which may introduce additional risks. |
| Scalability |
Limited scalability due to the focus on decentralization and security, resulting in slower transaction speeds and higher fees. |
Enhanced scalability due to off-chain processing, allowing for faster and cheaper transactions. |
| Consensus Mechanism |
Critical to the security and integrity of the L1 blockchain. |
Relies on the security and consensus of the underlying L1 blockchain for finality and dispute resolution. |
| Use Cases |
Foundation for the entire crypto ecosystem, including dApps, DeFi, and NFTs. |
Focused on scaling solutions for specific use cases like DeFi, gaming, or NFTs, often inheriting security from the L1. |
| Development |
Requires more time and resources for upgrades and improvements. |
Faster and more flexible as it happens on top of the existing L1 infrastructure. |
Layer 1 blockchains have the potential to transform a wide range of sectors, including decentralized banking, supply chain management, gaming, and even social networks. As the crypto environment evolves, keeping ahead of the curve becomes more important. Thus, make sure you have the right crypto wallet, such as Bitget Wallet, to ensure your spot in this future trend.
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