Layer 2

Layer 2 refers to scaling solutions developed on top of the Bitcoin blockchain to enhance transaction speed and lower fees without altering the fundamental security and decentralization of the base layer. These solutions address Bitcoin's inherent limitations in processing a high volume of transactions quickly, enabling broader adoption and more practical everyday use.

A prominent example of a Layer 2 solution is the Lightning Network, which facilitates near-instantaneous, low-cost Bitcoin transactions by creating off-chain payment channels between users. Transactions occur off the main blockchain, reducing congestion and fees while settling final balances on the Bitcoin mainnet. This design allows users to transact rapidly and frequently without compromising the security guarantees of the underlying blockchain.

Layer 2 technologies are crucial for Bitcoin's scalability and mass adoption, as they enable the network to support microtransactions and high transaction throughput. At the same time, Bitcoin enthusiasts emphasize that any Layer 2 solution must maintain the core principles of Bitcoin’s trustlessness, security, and decentralization, ensuring that improvements in speed and cost do not come at the expense of the network’s integrity.