understanding the basic elements of cryptocurrency: to study the solutions of layer 1 and layer 2

The world of cryptocurrencies has increased significantly in recent years and more and more people are interested in this digital currency. However, navigating the complex landscape of cryptocurrencies can be overwhelming even for the most experienced users. In this article, we explore the basic elements of cryptocurrency and examine two key concepts: layer 1 (floor 0) and layer 2 (1st floor).

What is cryptocurrency?

The cryptic currency is a digital or virtual currency that uses encryption for safe financial friends and is decentralized, which means it is not dominated by the government or institution. The first cryptocurrency, which is widely accepted, was Bitcoin, whose individual or group created in 2009 by Stoshi Nakamoto using pseudonym.

Cryptocurrencies use a unique technology called blockchain, which allows many computers to validate and store events without the need for brokers, such as banks. This decentralized network allows safe, fast and transparent financial translations.

Solutions layer 1: Cryptocurrency core

The solutions on the 1st floor are the foundation of the encryption currency, which offers basic technology that allows safe and incredible events. These solutions include:

* Blockchain : Distributed main book that records all events on a particular blockchain network.

* crying : a set of mathematical algorithms used to provide events and create new currency units.

* Consensis mechanisms : algorithms that validate and record transactions in blockchain, such as POW (POW) (POS).

Solutions on layer 1 are responsible:

• To ensure the safety and integrity of cryptocurrency transactions

• Adjusting the creation and distribution of new currency units

• Facilitating equal networks without brokers

Layer 2 solutions: adding value to cryptocurrency

Although floor 1 solutions offer basic activities, they can be difficult and slow in some cases of use. To solve these restrictions, Layer 2 solutions have been developed to improve performance, scalability and ability to use.

The solution of the layer 2 aims to build the strengths of layer 1 by adding value in different ways:

* Events from outside the chain : The solutions on the 2nd floor allow faster and more efficient events outside the main block chain.

* Side frames : These are separate block chains that allow safe and reliable interaction between different blockchain networks.

* Oracles : Information provides from external sources that can be used to verify and validate transactions in the block chain.

Solutions on layer 2 often use techniques such as:

* Sharding : Distribution of a block chain in smaller segments, allowing more efficient processing.

* Liquidities groups : Construction of an unconfect market in which users can buy and sell tax -free cryptocurrencies.

* SHALL MECHANISMS

: Allow users to participate in administrative and decision-making processes in a decentralized network.

Examples of real world

Let’s look at the effectiveness of Layer 2 solutions, consider the following examples:

* The main XRP book of Ripple : Quick, scalable and protected from outside the chain that allows real -time payments above the borders.

*!

Conclusion

Cryptocurrency is a complex and rapid development space, and new innovations are created regularly. Layer 1 Understanding the basic elements of solutions offers a solid basis for browsing this world.