What makes a layer one blockchain, and why is it so important?
As layer two approaches to blockchain scaling flood the cryptocurrency ecosystem, what exactly is a layer one blockchain, and how is it different from the latter? Let's find out!
What Is Layer 1 In Blockchain?
One of the best examples of a layer one blockchain is Bitcoin. It is a base layer blockchain where transactions are validated directly on the blockchain. Comparatively, something like the Lightning Network is considered a layer two solution as it is relatively abstracted from the Bitcoin base layer. While the terms can sometimes get conflicted, the easiest way to differentiate the two is that layer one blockchains can typically exist independently. In contrast, layer 2 requires the former for settlement or other functionality.
What is Important in a Layer 1 Blockchain?
Layer 1 blockchains focus on three main traits, decentralization, scalability, and security. The problem is it’s increasingly difficult to achieve all three of these simultaneously, resulting in blockchains like Bitcoin focussing heavily on decentralization and security while others tend to focus more on scaling and security while lacking a little in terms of strictly how decentralized they actually are.
How are Layer 1 Blockchains Improved?
Layer one blockchains tend to move a lot slower in terms of how they attempt to improve this base layer, increasingly so the larger they get. Again, Bitcoin is an excellent example of this, as significant improvements often take years of back and forth community discussion. However, this isn’t necessarily a bad thing as it helps to ensure its key traits (security and decentralization) are maintained with as much care as possible.
Consensus is essential to a decentralized blockchain, but achieving consistent consensus poses significant challenges when proposing changes and improvements to layer one blockchains. Part of the issue with scalability is that disagreements can result in hard forks and split communities. This is something that was seen with block size in the Bitcoin community that resulted in the Bitcoin Cash fork, which then forked itself into other projects, further diluting this portion of the community. While this can also occur with layer two solutions, these projects are often expected to be more aggressive in moving forward and their tolerance toward experimental ideas.
How Ethereum is Evolving its Layer 1 Blockchain
Ethereum is another layer one blockchain that has spawned a series of layer two projects. While Ethereum can perform more transactions than Bitcoin, many of its primary use cases (engaging with smart contracts, for example) increase demand dramatically for transaction throughput. As a result, Ethereum is gradually shifting much of its core functionality towards leveraging more modern approaches to many of the issues it faces, hopefully improving its scalability. However, many would argue that it may very well hurt it in terms of decentralization and security; time will tell how much that actually affects the project.
Using Proof of Work to Secure Layer 1 Blockchains
It’s common to see proof-of-work used as the primary security source for a layer one blockchain, the most well-known blockchain to do this is Bitcoin. Proof of work typically involves network participants using computing power to process transactions in return for rewards using various cryptographic principles.
However, this can be highly challenging for new blockchains to take advantage of, given that the size of the network plays a significant role in how secure the network actually is at any given time. If only a few supporters are adding their resources to the network, it can be overcome by malicious actors relatively easily. As a result, we’ve seen an increase in cryptocurrency projects opting to simply release tokens on layer one blockchains or attempt to use other mechanisms like proof of stake to secure the network.
What does the future hold for layer one blockchain technology? It’s hard to say with so many competing ideas alongside the surge in layer two alternatives. However, what is fair to say is that established blockchains like Bitcoin are unlikely to be going anywhere anytime soon.
Will the future be filled with layer two options, or will layer one still dominate in years to come? Whatever the case, as always, when it comes to cryptocurrency, it will be exciting to watch and will likely result in massive innovation and ingenuity from those working on these technologies.