Layer 1s & Layer 2s
Moses Shawaly
Human-centered AI | Serial entrepreneur | Business Development | Keynote Speaker | former BBC & UN | Tech & Education ???? | Fluent in 5 languages??| Host???Shawaly Show???| Mentor | Connect & Follow + ??
As our character, Fatima from Wadiya, embarks on her adventure to build a financially resilient and independent community, she comes across somehow confusing terms such as Layer 1s, Layer 2s, and Trustless transactions. Knowing the difference will usher in new projects and opportunities.
In Web3 we often talk about layer 1s and layer 2s when discussing different types of cryptocurrency tokens. For instance, while Bitcoin allows for a layer 1 blockchain network, Ethereum enables layer 2 projects.?What does that mean??
Layer 1s are tokens that have their own blockchains designed for different goals. Bitcoin, the first decentralised digital currency, is for example designed for trustless transactions with enforced scarcity to preserve value. Bitcoin is changing finance the same way the web changed publishing. However, there are limits to what can be built on top of it due to its relatively simple structure.?
But wait a second, you might be already wondering if you should trust a ‘’trustless’’ transaction. The concept of ‘’trustless’’ in Crypto is not what it sounds like. In web3, it means that you don’t have to trust a third party: a bank, a person, or any intermediary that could operate between you and your cryptocurrency transactions or holdings.?
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Layer 2s are built on top of Layer 1 blockchains, often through smart contract technology. These can be, for instance, new tokens or decentralized apps (aka dApps). Ethereum was the first mainstream blockchain to incorporate smart contracts, and it hosted the first wave of dApps and tokens that set in motion and advanced Defi and web3.?
Knowing the difference, Fatima decides now to establish a platform token that will allow her to trade with other people in her community safely without having to rely on the unreliable banking system affected by armed conflict in her country.
Realtor Associate @ Next Trend Realty LLC | HAR REALTOR, IRS Tax Preparer
2 年Well Said.
Realtor Associate @ Next Trend Realty LLC | HAR REALTOR, IRS Tax Preparer
2 年Well Said.