The Layers of Blockchain: Understanding Layer 1, Layer 2 and Layer 3

+Exploring the Layers of Blockchain: Key Differences and Examples+

Are you curious about the different layers of blockchain and how each one plays a crucial role in its overall functioning? Let's take a look at an interesting story to understand how blockchain layers work.

An Interesting Story: The Tale of Sarah and Her Coffee Shop

Sarah owns a small coffee shop that has been consistently growing in popularity over the years. She realizes that she needs a more efficient way to manage her inventory, track her supply chain and ensure that her loyal customers are rewarded for their patronage.

This is where blockchain comes in. By using a blockchain platform, Sarah can keep track of her inventory and supply chain management in a transparent and secure way. Let's take a closer look at the different layers of blockchain that are involved in Sarah's operations.

The Different Layers of Blockchain: L1, L2 and L3

There are three main layers of blockchain, known as L1, L2 and L3.

Layer 1

Layer 1 is the foundation of blockchain technology. This layer is responsible for the underlying infrastructure and security of the blockchain network. It involves protocols that govern how transactions are confirmed and validated, as well as how new blocks are added to the blockchain. Examples of Layer 1 blockchain platforms include Bitcoin, Ethereum and Litecoin.

Layer 2

Layer 2 is built on top of Layer 1 and focuses on scaling and improving the efficiency of the blockchain network. It involves the development of protocols that allow for faster and cheaper transactions, as well as the ability to handle more complex smart contracts. Examples of Layer 2 blockchain platforms include Lightning Network and Sidechains.

Layer 3

Layer 3 is where blockchain platforms are developed for specific use cases and industries. This layer involves the creation of decentralized applications (dApps) that utilize the underlying infrastructure provided by Layers 1 and 2. Examples of Layer 3 blockchain platforms include Filecoin, Augur and Golem.

Conclusion

So, what have we learned about the layers of blockchain?

  1. Layer 1 is the foundation of blockchain technology and includes protocols for transaction confirmation and validation.
  2. Layer 2 focuses on scaling and improving the efficiency of the blockchain network through the development of new protocols.
  3. Layer 3 is where blockchain platforms are developed for specific use cases and industries through the creation of decentralized applications.

Now that we've explored the different layers of blockchain, we can better understand how blockchain technology is changing the way we do business and store information.

References

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