Blockchain technology is a growing technology with different factors upholding its smooth operations.
Scalability is a major concern when it comes to blockchain technology.
This is because, a more scalable blockchain is preferred to a blockchain with low scalability.
But as a beginner, what is scalability?
It will be easier to understand the two blockchain layers after assimilating what scalability entails.
Therefore, before jumping into the topic of today, let’s discuss scalability.
What is Blockchain Scalability?
Umm, how well will I put this? Okay, fine…
One major problem with data usage protocols is how they handle and process loads.
The loading may arise as a result of;
- Increase in users
- and Increase in users’ data, etc.
The blockchain, as a data storage technology, is also prone to loading.
As more users tumble into any blockchain network, many transactions are often executed, giving rise to an increase in transaction loading.
So, what happens when a blockchain is fully loaded? This will really help us understand blockchain scalability. Let’s go on.
When a blockchain is loaded, if it’s scalable, it can withstand the loading by increasing its nodes.
However, some blockchains fail to manage loading and that results in delayed transaction approvals.
Now, what is Scalability?
Scalability is the ability of a blockchain to withstand an increase in data loads and nodes.
Blockchain scalability is the ability of a blockchain to manage increased transaction loads, while increasing the number of nodes in the network.
Scalability happens to be a key factor in the choice of blockchains, the reason being that daily increasing number of users and the adoption of blockchain technology can affect blockchain performance greatly.
As such, any blockchain that lacks good scalability can suffer degradation in the long run.
umm, let’s take a little illustration to get this thing straight.
Easy Illustration of Blockchain Scalability
Okay, so, picture yourself in any supermarket of your choice…
Let’s say only few customers were around that particular day, and the supermarket has only one clerk….
What do you think will happen? Just a guess?
You will see that, since there are only few customers, the clerk will be able to withstand the pressure(loading), and carry out all transactions efficiently and swiftly.
But wait!!! What if there are many customers?
umm, problem right?
You will see that transactions will be drastically delayed, since only one clerk(node) can’t manage huge amount of users(loading).
As such, customers will be less satisfied.
Customers will also protest for an increase in clerks(nodes) to help increase transaction throughput(Scalability).
Now that it is clear, let’s relate this to blockchain scalability.
A better-scalable blockchain will allow for an increase in nodes to withstand high loading, while a poorly scalable blockchain is not flexible enough to allow nodes change, thus there will be delays in transaction approvals.
So, What is a Layer One Blockchain?
Layer one blockchains are also known as the foundation or base blockchains, the reason being that it is the primary network for the particular cryptocurrency(ecosystem).
Layer1 blockchains are normally referred to as on-chain networking and they need no customizations.
Instead, they are the base network on which other blockchain offerings (NFTs and Defi) can be built on.
For instance, Bitcoin is a Layer one cryptocurrency because it has its base blockchain(Bitcoin blockchain).
Are all cryptocurrencies layer one?
No! For any cryptocurrency to be Layer 1, it must be able to process and complete transactions on its own blockchain.
Also, Layer one blockchains have their native tokens, which are used for transaction fees.
However, these blockchains have their known shortcomings.
The known Shortcoming of Layer one Blockchains
Amongst other shortcomings, the major shortcoming of the layer one blockchain is scalability.
Layer one blockchains like Bitcoin has a low transaction throughput, which lead to delays in transaction approvals, as it doesn’t support an increase in nodes.
This is the main reason why layer 2 scaling solutions emerged; building on layer one blockchains to solve the scalability issues, without compromising decentralization.
Some examples of Layer 1 blockchains
According to coinmarketcap, the following are layer 1 blockchains.
- Bitcoin (BTC)
- Ethereum (ETH)
- Solana (SOL)
- Avalanche (AVAX)
- Cosmos (ATOM)
- Polkadot (DOT)
- Cronos (CRO)
- Cardano (ADA)
- Binance Smart Chain (BNB)
- Near Protocol (NEAR)
- Fantom (FTM)
- Algorand (ALGO)
- Harmony (ONE)
- Elrond eGold (EGLD)
- Hedera (HBAR)
- Monero (XMR)
- Ripple (XRP)
- Aptos (APT)
What is Layer 2 Scaling solution?
Layer 2 scaling solutions are not the base blokchains, but they are built on top of layer one blockchains to improve their scalability, efficiency, and functionality.
Layer 2 scaling is the technology that is built on the underlying blockchain protocol (Layer 1).
How is this achieved?
Layer 2 scaling transfers some of the transactional load of the Layer 1 blockchain to a secondary chain, to adjust the system architecture by reducing the workload on the main chain.
By extracting most of the data loads into additional architectures, the layer 1 blockchain becomes less congested, functional, and more scalable.
After the transfer and extraction, it then handles the network processing load and simply reports back to the main chain(layer1) for finalized results.
Simply put, layer 2 scaling solutions processes transactions off the base blockchain to achieve better scalability.
The shortcoming of Layer 2 scaling
Oops, we also have a shortcoming here, what do you think? Just a guess?
Since this scaling process involves a third-party network(for transfer and extraction of transaction load), security can be easily breached.
The following blockchains are used to improve the functionality and scalability of Ethereum.
- Polygon (MATIC)
- Loopring (LRC)
- Immutable X
- xDai Chain
Layer 1 Versus Layer 2
Well, I guess you were waiting for this battle, smiles…..
We can’t rush to choose sides here, the both blockchains are wonderful, to some extent.
We just have to look at their roles in the blockchain space.
- They improve the blockchain architecture by providing advanced solutions in large-scale protocol upgrades like sharding and forking.
- Their security is guaranteed.
- They improve the scalability of the base blockchain through different processes.
- Transaction approval is faster and efficient.
Just a quick one, What is Blockchain Trilemma?
Before we slide, can a blockchain be decentralized, secured and scalable, all together?
Umm, that’s actually the concept of Blockchain trilemma, it claims that no blockchain can be decentralized, secured, and scalable totally.
That is technically true, and the reason we have layer 1 and layer 2 cryptocurrencies.
- Bitcoin and ethereum are layer-one blockchains with decentralization and security, but poor scalability.
- Binance smart chain on the other hand has good security and scalability, but with little decentralization issues.
Nevertheless, the blockchain trilemma remains a curse…..
After all is said and done, we can see that there is no ideal blockchain.
However, we don’t have to compromise decentralization and security in any blockchain network.
With this, Bitcoin blockchain remains the most secure and respected blockchain in history.