Layer 1 Blockchain
Blockchain Scalability Explained
To understand Layer 1 blockchains, it’s important to first learn how blockchain scaling works. To maintain a blockchain’s security and functionality, there are thousands of nodes working around the clock to process transactions. To handle such large numbers of transactions, large volumes of data must be stored and shared across all nodes.
To compete with traditional payment processing systems, blockchain networks need to be highly scalable. For instance, the Bitcoin and Ethereum networks can process between 5 and 30 transactions per second (TPS). Visa, on the other hand, can process a staggering 24,000 TPS with its VisaNet electronic payment network. Developers are working on multiple methodologies to improve the scalability of these blockchain networks.
What Is a Layer 1 Blockchain?
A Layer 1 blockchain is the foundation layer of every blockchain network. Simply put, it’s a network that functions as an infrastructure for other protocols, apps and networks on which to build. Layer 1 is in charge of programming languages and conscious processes, as well as rules and parameters that allow a blockchain network to properly function. The best-known examples of Layer 1 blockchains are Ethereum, Bitcoin and Litecoin.
Even though all Layer 1 blockchains have some similarities, they differ in many ways, including:
- Block validation (PoW, PoS or PoA)
- Number of blockchains in their ecosystem
- Interoperability with other networks
While you can modify a Layer 1 blockchain, it’s far easier to build a Layer 2 solution on top of it. Doing this won’t change anything in the first layer. However, it will allow users to enjoy benefits such as quicker transactions and additional features.
Layer 1 Blockchain Limitations
Lack of scalability is the biggest obstacle which prevents blockchains from properly competing with popular legacy services. Without quick transactions, mass implementation of blockchain networks like Bitcoin and Ethereum simply isn’t possible.
The Scalability Trilemma is a term coined by Vitalik Buterin, the Russian-Canadian programmer and one of the co-founders of Ethereum, to describe the mandatory compromise needed to improve the existing architecture of blockchains. There are three properties to balance:
As Vitalik has explained, to improve a blockchain, there has to be a trade-off between the three aforementioned properties. The creators of Bitcoin, for example, choose to focus on security and decentralization, thus compromising on scalability.
Examples of Layer 1 Scaling Solutions
There are a couple of solutions for Layer 1 blockchain scaling. The first is sharding, which breaks the job of authenticating and validating blockchain transactions into small bits. That makes the process a lot easier to manage.
Another solution is the proof of stake (PoS) consensus mechanism, which is designed to substitute the need for resource-intensive mining. At the moment, Ethereum is in the middle of a transition from being a proof of work (PoW) to a PoS blockchain.
The Future of Layer 1 Blockchain
Scalability is the only way Bitcoin networks will be able to compete with traditional financial systems. A good network needs to be able to accommodate growth in terms of transactions, users, and other parameters.There’s a whole new generation of Layer 1 blockchains — for instance, Solana, which aims to solve the scalability problem. If you want to know more about the differences between blockchain Layer 1 and Layer 2 in greater detail, you can read our article on Bybit!