Layer 2

In software engineering, application infrastructures are commonly built using a layered approach. Similarly in crypto, this refers to a blockchain’s network infrastructure of a cryptocurrency such as Bitcoin or Ethereum. However, in blockchain, there are two primary layers: Layer 1 and Layer 2.Layer 2 refers to an overlaying network that is built on top of the underlying blockchain. If Bitcoin is the Layer 1 network, Lightning Network is Layer 2. Layer 2 architectures provide improvements and solutions to preceding Layer 1 networks. Layer 2 inherits properties of the layer it builds on top of and expands the overall functionality and scalability of the system. For example, Bitcoin’s Layer 2 Lightning Network aims to execute multiple microtransactions while wasting less time via mining verifications and requiring less unnecessary transaction fees. Ultimately, layered solutions aim to create a more secure and efficient system. By stacking layers within the system, it combines each layer’s individual strengths and minimizes weaknesses. As Layer 1 blockchains are more predicated on security, Layer 2 solutions focus primarily on scalability (enhancing throughput).