Cryptocurrencies are built on blockchain networks. Just as a house is built starting with a solid foundation, a crypto network starts with its layer-1 blockchain. This is the foundation of the entire system and controls processes such as security, transaction processing and much more.
This article explains exactly what we mean by layer-1 in terms of cryptocurrency and blockchain technology, from the definition of L1 blockchain to real-world examples and examples.
Table of contents
What is blockchain?
A blockchain network is a network of computers, called nodes, that work together to process information. This information is processed block by block and each block is added to a permanent ledger that cannot be edited unless a majority of nodes agree to make a change.
As such, blockchain networks with many nodes can become very secure and difficult to censor or attack. This security and the immutable, immutable nature of the network information is the foundation for cryptocurrency networks like Bitcoin.
What is Layer 1 Blockchain?
A layer-1 blockchain in crypto is a network where transactions are executed and confirmed directly on the blockchain.
While layer 2 blockchains exist to augment and take the pressure off layer 1 blockchains, a layer 1 blockchain network is the most important network required for a cryptocurrency to function.
For example, Bitcoin and Ethereum are layer 1 blockchains and do not require another blockchain network to perform their activities, such as confirming transactions and creating new units of currency.
Decentralization in L1 Blockchains
In cryptocurrency, layer 1 blockchains are often designed to be decentralized, meaning that no single authority controls the nodes that process the transactions and run the network.
Entities called miners process transactions in exchange for crypto rewards, and while smaller L1 chains are often centralized, networks like Bitcoin and Ethereum are controlled by competing mining pools that ensure no single central figure makes all the decisions.
This relative decentralization is a major factor in the popularity of layer 1 blockchains, and cryptocurrency in general.
Their independence allows them to create and improvise their own security protocols and governance hierarchies, which in turn makes them more reliable than other types of blockchain layers such as Layer-2, Layer-3, and so on. But what key features make layer 1 blockchains so reliable and robust? Let’s find out below.
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Key features of layer 1 blockchain
Layer-1 blockchains offer several features that ultimately all serve one purpose, which is to improve the functionality and autonomy of the entire blockchain ecosystem. Here are some of the key features:
1. Freedom
Independence makes layer-1 an easy sell for an upcoming cryptocurrency project to build its platform on layer-1 alone. By simply creating their governance and security protocols, layer 1 blockchains ensure that their core functions are not dependent on other blockchain layers, directly providing a high level of security and decentralization.
2. Native cryptocurrency
Whether staking, governance or transaction fees, users of layer 1 protocols do not need to purchase another token to perform these tasks, but only the native cryptocurrency is used. This entire process ensures transparency and trust, which contributes to the growth of the layer-1 blockchain network.
3. Consensus mechanisms
With a custom consensus algorithm, each layer 1 blockchain ensures network integrity and validates transactions with the highest number of security protocols. Two important examples of such mechanisms are Bitcoin, which uses Proof-of-Work (PoW) and Ethereum, which uses Proof of Stake (PoS). With its army of nodes following the consensus algorithm, the entire transaction process becomes transparent and secure.
4. Community-driven governance
Stakeholders play a key role in driving ecosystem growth in layer 1 blockchains. This means participating in voting processes that determine key decisions that directly impact the future of the project. Overall, this process harmonizes a sense of ownership and promotes decentralization, which plays a key role in encouraging new cryptocurrency projects to build in this space.
Other features include scalability, smart contract functionality and potential for continued development.
List of layer 1 blockchains
There are at least 130 layer 1 blockchains that offer security and autonomy, along with other important features mentioned above. Here we discuss the three top layer 1 blockchains.
1. Bitcoin (BTC)
Launched in 2009 by an anonymous founder known as Satoshi Nakamoto, Bitcoin (BTC) is the father of cryptocurrencies and works on the Proof-Of-Work (PoW) mechanism. As a layer 1 protocol, Bitcoin provides autonomy by offering robust security features, allowing peer-to-peer transactions without the need for a third party, making it the most trusted blockchain network and currency in the web3 world is.
2. Ethereum (ETH)
Ethereum was the first blockchain to introduce the world of smart contracts to the blockchain space. It opened new development gates in the blockchain world as it made it easier for web3 developers to build decentralized applications (dApps) on the Ethereum blockchain. Ethereum also launched the Proof-of-Stake (PoS) model that further improved scalability while reducing energy consumption by a wide margin.
3. Binance Smart Chain (BSC)
Binance Smart Chain has two main features: one is to maintain low transaction fees and the other is to provide high performance at all times. This layer-1 blockchain has also positioned itself in the world of DeFi due to its easy-to-use operating system and fast transaction speeds, making it ideal for both the average user and for new development projects looking to build on this layer. 1 blockchain.
The future of layer 1 blockchains
There is no doubt that layer 1 blockchains play a crucial role in the world of decentralized technologies. From running decentralized apps and transacting on standalone blockchain infrastructure to smart contracts, layer 1 blockchains act as a foundational platform in the blockchain world. However, we cannot deny that these networks still face challenges, especially as transaction volumes and/or user adoption increase over time.
To overcome these challenges, many of these layer 1 blockchains have begun experimenting and researching to improve their architectural designs and consensus algorithms.
For example, some blockchains have added Proof-of-Stake (POS) and sharding mechanisms to lower transaction costs and reduce latency, but despite these critical innovations, layer-1 blockchains like Bitcoin and Ethereum are still on their way to low- 1 blockchains. 2 blockchains that offer a broader range of solutions to the challenges in the blockchain world.
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In the future, we can expect more evolution of layer-1 protocols as they adapt to new ecosystems, become more interoperable, and become a combination of intrinsic improvements, thanks to layer-2 and layer-3 blockchain technologies.
Credit : cryptonews.net
