Thread by @WisdomTreePrime

#Blockchain technology can seem intimidating and overwhelming to learn - we get it.

🚨 Don't worry! We're here to help!

In this week's #thread, we will be explaining what #Layer1 and #Layer2 are - giving you an overview of the benefits and tradeoffs of each

📜 👇👇👇

Before we dive in, let’s first 👀 at the fundamental attributes of a #blockchain. Blockchain is a revolutionary form of distributed ledger #technology (DLT)

💻 It combines computer science & cryptography to make a decentralized ledger (aka record) of transactions.

All transactions are contained in 'blocks' & immutably inter-linked 🔗🔗 with all previous transactions.

📒 This record of transactions is distributed across a peer-to-peer network of computers called nodes. Each node in the network must agree that each transaction is valid/true before it can be added to a block and appended to the blockchain.

Once appended to the blockchain, transactions cannot be altered or tampered with at all. It's a #digital permanent record.

Simply put, a #blockchain is a #digital record of transactions shared with all users in a network, in order to verify & validate all transaction data.

⏭⏭ Next, we need to take a look at Blockchain #Scalability

Scalability refers to how many Transactions a blockchain network can digitally record, verify, & validate in a second.

#Scalability is mostly referred to as TPS aka Transactions Per Second (or Throughput)

↗↗As a blockchain grows in popularity & usage, users require more transactions to be processed and this creates a transaction bottleneck which slows down the network or halts it entirely.

This network congestion can also increase the cost of doing a transaction on the network

💾 In a decentralized ecosystem, a Layer-1 network refers to the #blockchain itself, while a Layer-2 protocol is a third-party integration that can be used in conjunction with a Layer-1 blockchain.

@Bitcoin, @StellarOrg, @avalancheavax and @ethereum, for example, are Layer-1 blockchains that process & finalize transactions on their own blockchain.

Layer-1 scaling solutions augment the base layer of the blockchain protocol itself in order to improve scalability.

💡Did you know @WisdomTreePrime uses @StellarOrg in the app? (not yet launched)

Stellar is a Layer-1 open-source, #decentralized, peer-to-peer blockchain network providing a framework for developers to create applications, issue assets, and connect to existing financial rails?

Bitcoin is a Layer-1 network, whereas the lightning network is a Layer-2 network providing Bitcoin increased transaction throughput

@ethereum blockchain’s Layer-1 can process about 15 transactions per second (TPS), while Layer-2 solutions could offer up to hundreds of thousands of TPS.

Examples of @ethereum Layer-2 is @0xPolygon, @optimismFND, and @arbitrum

🛠 A number of methodologies are currently being developed & practiced that improve the scalability of blockchain networks directly.

↗ Layer-1 scaling solutions can be increasing the amount of data contained in each block, or accelerating the rate at which blocks are confirmed and verified to be truthful.

This would increase overall network throughput.

Layer-2 refers to a network or technology that operates on top of an underlying blockchain protocol to improve its scalability and efficiency.

🏗 Layer-2 scaling solutions can entail shifting a portion of a blockchain’s transactional burden to an adjacent system architecture, which then handles most of the network’s processing & subsequently reports back to the MAIN/Layer-1 blockchain to finalize its results

Layer-2 abstracts the majority of data processing to auxiliary architecture and in turn, the base Layer-1 blockchain becomes less congested — and ultimately more scalable.

Handling even more Transaction Throughput (TPS).

If you enjoyed this thread & learned something, please scroll back up to like/RT the first tweet in the thread.

🧠 Our goal is to help others learn about all the amazing benefits to Blockchain Technology, so please pass it along!

If you missed it, our first Blockchain 101 thread can be found here:

Also, give us a follow @WisdomTreePrime so you don't miss out on future threads on topics like:

👉 DEX's & CEX's
👉 Mining and Blockchain Rewards
👉 Tokenization of Real World Assets
👉 #DigitalAssets Terminology
👉 Blockchain Use Cases

And so much more❗❗