The Layer 1 Blockchain is the foundational blockchain. It is responsible for on-chain transactions. Using the Layer 1 Blockchain will increase throughput and reduce transaction costs. Let’s explore the benefits and limitations of this type of blockchain. We’ll also talk about how to implement it in your organization. Read on for more information. *An independent verification chain reduces the risk of attack. *High throughput demands result in a longer confirmation time.
Layer 1 is the foundational blockchain
A layer is the foundational layer of a blockchain network. This layer secures the blockchain network from external attacks and is also responsible for transaction processing. Layer 1 blockchains are based on consensus algorithms, which address the problems of double-spending and incentivization. Digital files are infinitely reproducible, but blockchains solve these issues by adding transactions to a series of blocks. These blocks are the “chains” in which blockchains store and process transactions.
In contrast, a centralized database only permits access to a small set of individuals. It also has the potential to be changed and lost, especially if the system is shut down. In contrast, blockchain data is public, immutable, and decentralized. There are different types of layer 1 protocols, but they can all be classified under three main characteristics. In general, a Layer 1 chain has more features than a Layer 2 chain.
It is responsible for on-chain transactions
The first blockchain layer is called the Layer One Blockchain, and it is responsible for on-chain transactions. There are two main types of blockchains, Proof of Work and Proof of Stake. Proof of Work blockchains are a lot faster than Proof of Stake, but they also require much more computing, bandwidth, and storage resources. In addition, more nodes mean better security, but it can also slow down transactions.
The first blockchain layer is largely unaffected by the state channel between two users. It only records transactions that take place on the blockchain, not every move the two users make. Since it’s the only blockchain on the network, layer one is prone to reaching a cap. But it can eventually handle the increased number of transactions and prevents the network from being overloaded. Layer two blockchain is separate, but it works hand in hand with the first one.
It can increase throughput
Scaling issues are a big problem for Layer 1 Blockchain Trilemma, including Bitcoin and Ethereum. These two systems secure their networks using a distributed consensus model that requires many nodes to validate transactions. To achieve this, miners compete to solve a complex computational puzzle. Those who are successful in this process are rewarded with their native cryptocurrency. However, these solutions can increase throughput and capacity across the entire network. As a result, the network can handle more transactions than ever before.
The Ethereum Level 1 blockchain records all transactions in a public, auditable ledger. Another scaling solution for this technology is sidechains. Sidechains operate independently of the mainchain and have their own consensus mechanism. This means that sidechains can be optimized for processing speed and scalability. The mainchain must still handle transactions, security, and disputes. However, this approach has its drawbacks. These sidechains can increase throughput by up to 100 times, despite the fact that it requires more resources.
It can reduce transaction costs
The Layer 1 Blockchain provides a way for transactions to take place at a fraction of the cost. This technology is called a “source of truth” and is responsible for accounting for all transactions. This includes the user accounts and wallets, along with their corresponding cryptocurrency balances. Hence, this layer can be considered as the backbone of Ethereum. However, there are some disadvantages of Layer 1 Blockchain. The main disadvantage is the lack of security.
While the concept of a blockchain has many advantages, it is important for managers to consider the ramifications of the technology before embracing it. In particular, managers must look beyond the hype and understand how to integrate new technologies into the business. A blockchain is a new technology that focuses on the scope and efficiency of market exchanges. In any economic exchange, there are costs associated with it, namely, the transaction cost and the agency cost. These costs arise from information asymmetry and market imperfections.
It can implement sharding
In a blockchain network, computers that facilitate transactions are called nodes. A full node stores the history of the blockchain, and requires enormous memory, computing power, storage space, and network bandwidth. However, sharding can reduce the workload of full nodes by dividing the data between many small shards. This will reduce the total workload of full nodes, and they will be able to focus only on the data related to one shard.
In a layer-one blockchain, a single node hosts multiple shards. Each shard can host one or more transactions, but the amount of space each shard requires may be larger than the capacity of the node. In addition, frequent interactions between different shards can decrease the efficiency of the network. Nevertheless, sharding has many advantages. It can increase the amount of storage and the efficiency of the network.
It can implement Proof of Stake
As the Bitcoin blockchain scales, the need for scaling solutions is evident. A solution is sharding, which allows the blockchain to be divided into separate database blocks. This enables the network to scale more efficiently by offloading the transactional load to more nodes. With this approach, Layer 1 Blockchains can implement Proof of Stake. While this solution is still in its infancy, it provides some interesting potential benefits.
Although these improvements are possible, they are not easy to implement. For example, Ethereum is in the process of upgrading its protocol to implement Proof of Stake. It has taken years for the Proof of Stake process to be developed. Further, some use-cases simply cannot work with Layer 1 due to scalability issues. For instance, games that require a high transaction speed and no centralized authority can’t realistically operate on the Bitcoin network. Fortunately, Layer 2 solutions are available.
