Whenever there is a launch of some blockchain network, it starts being compared with existing players in terms of specifications but how far this is right.
Cryptocurrencies are the form of digital currencies based on blockchains that are created, operated and stayed there. Later on these crypto-assets are divided into coins and tokens, depending upon the type of blockchains they are based on. There are two particular categories of blockchain networks that are Layer 1s and Layer 2s.
Primarily, Layer 1 blockchains are basic blockchain networks that have their own crypto-asset while cryptocurrencies belonging to a Layer 2 blockchains are created on top of Layer 2 blockchains. These Layer 2 projects are built upon Layer 1 blockchains and operate using smart contract technology.
Layer 2s can be either any new tokens or some more complex projects including decentralized applications or DApps. However it’s not necessary for Layer 2 projects to depend upon or to utilize smart contracts, instead it could be designed in such a way. For instance Lighting Network of Bitcoin doesn’t use smart contract tech as it is designed itself to provide facilities of making payments in bitcoin faster and cheaper, using the transaction batching system.
There are a bunch of Layer 1 blockchain networks that are created, designed and optimized to get assigned for different goals. Such a first blockchain network Bitcoin is designed to provide a facility to first cryptocurrency bitcoin (BTC) to act as a simple and trustless transaction that would not need any intermediary, while its scarcity would preserve its value.
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But other than providing infrastructure for cryptocurrency bitcoin (BTC), the Bitcoin network is limited in terms of building any project on top of it because of its relatively simple structure. This inability of the bitcoin network was taken care of by the Ethereum network’s developers who created the first mainstream blockchain, one of its kind that could have incorporated smart contracts. It became the first blockchain network to facilitate infrastructure to dApps and tokens that resulted in creating a wave of them.
Still with time when Etheruem network got popular and widely adaptable, more and more projects turned towards it but its limitations started becoming its shortcomings. The first smart contract blockchain gas fees started going high while transaction speed got lower. This inability gave ways for many other blockchain networks to emerge and fulfill the demand gap.
Blockchain networks like Cardano, Solana, BNB Smart Chain, Avalanche, Algorand, PolkaDot, TRON, Cosmos and a lot more, started being seen as the future of blockchain technology. Due to their specifications way better than Ethereum including consensus mechanisms other than proof of work, using either proof of history or proof of stakes, higher transaction speed while low gas fees, etc. All have their own specific utilities too but still Ethereum has dominance in the space, from here it will be interesting to see which could turn out to be the best out of them or Ethereum might end up being at the top of all.