Understanding Layer 1: Building the Foundation of Blockchain

Layer 1 is the fundamental layer of blockchain architecture. This layer provides the basic protocols and functioning of the blockchain network. For Bitcoin, this layer includes the Bitcoin protocol, and for Ethereum, it encompasses essential structures like the Ethereum Virtual Machine (EVM). Layer 1 determines the fundamental functionality of the entire network and manages transactions on the blockchain.
Key Features:
Consensus Mechanisms: Layer 1 includes mechanisms used to establish consensus among nodes in the network. Different consensus algorithms such as Proof of Work (PoW), Proof of Stake (PoS), and Delegated Proof of Stake (DPoS) are integral features of Layer 1.
Smart Contracts and DApps: Layer 1 incorporates protocols supporting smart contracts and decentralized applications (DApps). This enables developers to build various applications on Layer 1.
Asset Management: The creation, transfer, and management of cryptocurrencies and other digital assets occur on Layer 1. This forms the foundation of the cryptocurrency economy.
Blocks and Transaction Speed: Layer 1 determines how blocks are created and how transactions are verified. This significantly influences the transaction speed and scalability of the network.
Layer 1 and the Cryptocurrency Economy:
Layer 1 plays a central role in the cryptocurrency economy. Popular blockchains like Bitcoin, Ethereum, and Binance Smart Chain have their own Layer 1 structures. These layers enable the creation of cryptocurrencies, the execution of smart contracts, and user interactions on the blockchain.
Challenges and Progress:
Despite the numerous advantages brought by Layer 1, challenges such as scalability and energy consumption exist. Therefore, developers are actively working on various solutions and updates for Layer 1.