Blockchain technology has built an empire since its initial debut in 2009 when linked to the creation of Bitcoin. While blockchain is a fundamental part of cryptocurrency, there is still very little known about this innovation. Just like any complex progress or idea, there are layers, and we are here to peel them back to bring you the basics.
First, you need to understand blockchain technologically, in its most simple terms, it is a transparent and encrypted digital ledger verified in order to ensure it is incorruptible. Blockchain technology provides fast and secure transfers of data, in relation to cryptocurrency, it is the ownership of assets. Cryptography has made this all possible, in order to understand the layers, we have to look at the core.
Cryptography: The Creation Of Blockchain Technology
Cryptocurrency as we know it, blockchain included, would not be the shining star it is today without cryptography. Cryptography provides internet security by converting information into code through encryption. This encryption ensures that only the recipients have access to the relevant information, and it is safe from the hands of hackers.
The origin of cryptography comes from two ancient Greek terms: Kryptos which means “hidden”, and graphein which means “to write”. There are 3 main types of cryptographic algorithms including Symmetric-Key Cryptography, Asymmetric-Key Cryptography, and Hash Functions. Now that you’re more acquainted with these terms, let’s dive deeper into blockchain layers.
Blockchain Layers 0, 1, and 2
Blockchain Layer 0 Explained
Layer 0 refers to the foundational layer of the OSI model and mostly revolves around the integration between blockchain and traditional networks. Also known as the data transfer layer. Cosmos and Polkadot are some great examples of Layer 0 Blockchains.
Blockchain Layer 1 Explained
Layer 1 refers to the scaling solution implemented on top of the blockchain’s base protocol, running on a core chain to improve transactions on sidechains. Also known as the on-chain scaling layer. BNB Smart Chain, Ethereum, and Solana are some great examples of Layer 1 Blockchains.
Blockchain Layer 2 Explained
Layer 2 refers to the protocols and ground rules in place to ensure transaction speeds are increased with the use of state channels, sidechains, and other solutions. Also known as the off-chain scaling layer. Bitcoin Lightning Network and the Ethereum Plasma are some great examples of Layer 2 Blockchains.
Perfectly Baked Crypto Cake
These blockchain layers allow projects to build from the ground up, starting with layer 0 requirements. All these layers are fundamental to what makes blockchain technology so powerful, but each is of its own importance. Think of layer 0 as blockchain networks at their roots, think of layer 1 as project blockchains that allow other projects to be built, and think of layer 2 as side chains of the original.
More Layers: Blockchain Layer 3
Blockchain technology is ever-evolving, and it’s hard to keep up with its technical innovations. While layers 0, 1, and 2 have been an important part of taking cryptocurrency mainstream, there are already discussions around layer 3. Layer 3 blockchains are blockchain-based applications, with examples like DeFi apps, crypto games, and more.
It’s important to stay up to date on blockchain if you are involved in cryptocurrency, it can help you find and invest in trustworthy tokens. We hope we helped you learn a little more about blockchain layers. You can stay up to date on all things blockchain with Oobit, as well as buy cryptocurrency.
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