Bitcoin Layer 2: Smart Solutions for Faster and Cheaper Transactions!

Have you ever felt that Bitcoin transactions are slow and expensive? Don't worry, you're not alone! Bitcoin, as the first and most popular cryptocurrency, has some "drawbacks" that make people think twice about everyday transactions.

What is Bitcoin Layer 2 (L2)?

L2 is a secondary protocol built on top of the Bitcoin blockchain (referred to as Layer 1). They process transactions off the main blockchain (off-chain), but remain secure because they are "connected" to Bitcoin's security. So, L2 is like an "assistant" that handles many tasks, but still reports to the "boss" (Bitcoin).

Why Does Bitcoin Need L2?

- Lightning Network: It's like creating a "shared wallet" between you and your friend.

- Rootstock (RSK): It's like a "bridge" between Bitcoin and Ethereum. RSK allows you to create smart contracts (like on Ethereum) but still uses Bitcoin's security.

- Stacks: This also enables smart contracts and dApps on Bitcoin, but it works differently than Rootstock. Stacks uses a system called "Proof of Transfer" (PoX). Essentially, miners in Stacks have to "lock up" their Bitcoin to mine blocks on Stacks.

- Liquid Network: This focuses more on private (secret) and fast transactions, especially for financial institutions or large companies.

- Bitcoin Rollups: This is still relatively new, but has great potential. Rollups are like "rolling up" many transactions into one, then "sticking" it to the Bitcoin blockchain. This makes transactions more efficient and scalable. There are two types of rollups: Optimistic rollups (trust first, check later) and Zero-Knowledge rollups (using cryptographic proofs, so they are immediately proven valid).

Bitcoin L2 is a cool solution to address the issues present in Bitcoin. With L2, Bitcoin can become faster, cheaper, and have more functions. Each L2 has its own advantages and disadvantages, so the choice depends on your needs. Clearly, the future of Bitcoin looks brighter with the presence of L2!