The Tech Quiz - Season 18 | 15% to @hive-109435

Assalam o Alaikum everyone! I hope you will be well and good by the grace of Almighty Allah who is the most merciful and gracious to everyone.

Today I am here to participate in a contest organized by @malikusman1 about the food diary game. If you haven't joined it yet and you wanted to join it then join and share your tech knowledge here.

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Join Here: New Contest | The Tech Quiz - Season 18

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What are Layer 2 chains in crypto?

^{Image by Gerd Altmann from Pixabay}

Layer 2 chains refer to secondary blockchain networks that are built on top of existing main blockchains. These Layer 2 chains aim to address the scalability and high transaction fees. We know that there are huge transaction fees of different blockchains such as Ethereum. Layer 2 chains achieve this goal of cost effectiveness just by processing the transactions off chain. It can also be done by using different consensus mechanisms.

Which is your favourite one?

There are different layer 2 chains. Some of them are lightening network for bitcoin and for the ethereum. It also includes optimistic rollups and plasma. My favourite layer 2 chain is lightening network of bitcoin. It was designed to cope with the scalability problems of bitcoin. It enables quick transactions with the low transaction fees. The users perform the off chain transactions. It is beneficial for the micro transactions because of lower fees.

Bitcoin lightening network has gained a lot of attention in the market. It offers different services like the improved scalability, fast transactions, low fees. But it is still in the developing mode. But according to the experts it is an exciting development for the bitcoin blockchain. It enhances the performance of bitcoin blockchain.

Pros and cons of Layer 2 chains

Here are different pros and cons of layer 2 chains are given below:

Pros of Layer 2 chains

1. The scalability of a blockchain can be improved by employing of off-chain processing for multiple transactions using layer 2 solutions to help solve the problem of congestion in the main blockchain and reduce transaction fees.

2. Speedy Transactions: Layer 2 chains have been able to process fast confirmation times through which transaction can happen instantaneously.

3. Reduced Transaction Costs: Use of Layer 2 chains helps bring down the transaction cost involved in executing it on main chain, hence making it more affordable for users.

4. Better Confidentiality: A layer 2 chain could add privacy features that conduct off-chain transactions resulting in lower public visibility of detailed information about particular deals on the primary distributed ledger system.

Cons of Layer 2 chains

1. Centralization: In the off-chain transaction processing, some L2 solutions may result in a centralization level hence raising concerns of security and trustworthiness.

2. Complication: Using and implementing Layer 2 solutions can be complicated as it requires developers and users to understand its technology and protocols underpinning. This limitation of complexity might restrict the number of people who are willing to adopt or use it.

3. Interoperability issues: The transfer of assets or information between different layers is hampered by layer 2 chains that cannot interoperate with other layer 2 solutions or the main blockchain.

4. Vulnerabilities to security: On their part, Layer 2 chains seek to enhance scalability while lowering the fees, but they may introduce new risks relating to security. For every L2 solution, it is important that its embedded protocols for ensuring security must be critically evaluated before implementing it.

Conclusion

Layer 2 chains have revolutionized the blockchain networks. They have enhanced the existing performance of the blockchains by allowing them fast transactions with low transaction fees. They have increased the scalability of the blockchains. There are different types of layer 2 chains. And every layer 2 chain has its own specific pros and cons. Indeed they have different benefits but still they have some flaws. These are actually under development and improvements are required. On the whole layer 2 chains have solved the scalability problems and transaction speed and fees problems.

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I invite @mehwish-almas, @afrinn and @saintkelvin7 to join this contest.