We all know Bitcoin is slow and expensive. A coffee purchase shouldn’t cost $10 in fees or take an hour to confirm. But here’s the twist: Bitcoin was never meant to handle everything on-chain. Satoshi himself hinted at this back in 2008—he just didn’t call it "Layer 2."
Think of Bitcoin’s base layer (Layer 1) as a high-security vault—great for storing wealth, terrible for buying lunch. That’s where Layer 2 solutions come in. They’re like express lanes built atop Bitcoin’s sluggish highway:
Lightning Network: Instant, near-free micropayments (imagine tipping a creator $0.01 without sweating fees).
Sidechains: Faster, specialized chains (e.g., Liquid Network for traders) that peg back to Bitcoin.
Rollups & Statechains: Experimental but promising—bundling transactions to save space.
Satoshi’s early emails even floated a concept called "binks"—trusted intermediaries to handle small transactions. Today, we’ve replaced trust with code. The catch? Adoption is still clunky. Lightning apps feel like dial-up internet compared to Venmo.
Satoshi Nakamoto wrote:
“The bandwidth might not be as prohibitive as you
think. A typical transaction would be about 400 bytes
(ECC is nicely compact). Each transaction has to be
broadcast twice, so lets say 1KB per transaction.
Visa processed 37 billion transactions in FY2008, or
an average of 100 million transactions per day. That
many transactions would take 100GB of bandwidth, or
the size of 12 DVD or 2 HD quality movies, or about
$18 worth of bandwidth at current prices.”
The trouble is, you are comparing with the Bankcard
network.
But a new currency cannot compete directly with an old,
because network effects favor the old.
You have to go where Bankcard does not go.
At present, file sharing works by barter for bits. This,
however requires the double coincidence of wants. People
only upload files they are downloading, and once the
download is complete, stop seeding. So only active
files, files that quite a lot of people want at the same
time, are available.
File sharing requires extremely cheap transactions,
several transactions per second per client, day in and
day out, with monthly transaction costs being very small
per client, so to support file sharing on bitcoins, we
will need a layer of account money on top of the
bitcoins, supporting transactions of a hundred
thousandth the size of the smallest coin, and to support
anonymity, chaumian money on top of the account money.
Let us call a bitcoin bank a bink. The bitcoins stand
in the same relation to account money as gold stood in
the days of the gold standard. The binks, not trusting
each other to be liquid when liquidity is most needed,
settle out any net discrepancies with each other by
moving bit coins around once every hundred thousand
seconds or so, so bitcoins do not change owners that
often, Most transactions cancel out at the account
level. The binks demand bitcoins of each other only
because they don’t want to hold account money for too
long. So a relatively small amount of bitcoins
infrequently transacted can support a somewhat larger
amount of account money frequently transacted.
But here’s the big picture: If Bitcoin wants to go mainstream, Layer 2 isn’t optional—it’s survival. South Korea’s push for crypto ETFs and stablecoins could supercharge this, turning Bitcoin from a "digital gold" into a real payment network.
The question isn’t if Layer 2 will save Bitcoin—it’s when. And judging by the billions flowing into these solutions, the answer might be sooner than you think.