How Blockchain Helps Business in the Real World.
In today's world, contracts, transactions, and the detailed accounts they create are fundamental to our economic, legal, and political frameworks. They protect valuable assets, define organizational boundaries, and capture the flow of events. They also have an impact across borders, organizations, communities, and individual interactions, influencing managerial decisions and societal dynamics. However, despite their importance, these essential tools and the bureaucratic systems designed to manage them are struggling to keep up with the digital age. We all know how slow these systems can be - it's like comparing a 1950's Ford stuck in traffic to a Ferrari on the race track,.
In this new digital era, we need to transform the methods we use to regulate and wield administrative authority.
Let me explain how Blockchain works in a way that's easy to understand. There are actually multiple layers to it, each with a different job. Think of Layer 1 as the foundation, core transactions and data (like Bitcoin and Ethereum) are stored. Layer 2 is like a super-fast helper that processes smaller transactions quickly and then checks in with Layer 1 periodically. It's kind of like having an express lane next to a busy highway. Both layers work together to make sure everything runs smoothly. Layer 1 keeps everything secure, while Layer 2 makes things faster and more efficient. It's a great system that balances both security and performance!
Let’s delve into each of this further and help you understand how pivotal Blockchain can be to make businesses better, faster and cheaper.
Layer 1 Blockchain:
Okay, so think of Layer 1 as the backbone or the main road of the entire blockchain system. This is where the original transactions go down and where all the important info is stored. Layer 1 blockchains are like those huge, lumbering trains that can haul a ton of stuff, but might take a bit of time to get where they're going.
For example, Bitcoin and Ethereum are both major Layer 1 blockchains. When you send some Bitcoin to a friend or use Ethereum to run a smart contract, those actions happen right smack dab on the main Layer 1 blockchain.
Layer 2 Blockchain:
Let's think of Layer 2 as an express train that runs alongside the main train (Layer 1) to help it move faster and handle more passengers (transactions). The cool thing about Layer 2 blockchains is that they're designed to take some of the workload off the main blockchain by processing transactions more quickly and efficiently. Here's a fun example: Imagine you're in a theme park. The main entrance is where everyone lines up for tickets (Layer 1), but there's also a separate, faster lane (Layer 2) for people who have prepaid passes. The prepaid pass lane (Layer 2) helps speed up the process and reduces the wait time for everyone. Pretty cool, huh?
How They Work Together:
Layer 1 and Layer 2 blockchains work in harmony to provide a smoother and more effective blockchain experience. Here's how:
- Transaction Batching: Layer 2 blockchains bundle multiple transactions together before sending them to the Layer 1 blockchain. This reduces the congestion on Layer 1 and makes the process faster. It's like combining several packages into a single shipment to save time.
Basically it’s faster processing, lower fees and more efficient by managing multiple orders at once.
- Reduced Load: Layer 2 takes care of many smaller transactions, leaving the main Layer 1 blockchain to handle larger and more critical transactions. This prevents the main blockchain from becoming too slow and expensive.
In a nutshell this automates processes making everything faster and more accurate, reducing paperwork and administrative burden.
- Occasional Check-Ins: Layer 2 periodically reports summarized information to the Layer 1 blockchain, showing that everything is working fine. It's like the express train updating the main train about its progress.
This is akin to having a digital assistant who double checks everything, provides transparency to verify transactions and reduces errors.
- Security: Layer 1 ensures the overall security and integrity of the blockchain network, while Layer 2 focuses on speeding up transactions. This two-tier approach maintains the trustworthiness of the system.
Simply put it’s extremely difficult to alter any transactions using blockchain. Utilizing encrypted, authentication protocols, businesses would welcome tamper proof recording of transactions and safeguarding against data manipulation.
I know this can sound very dry, especially if you’re not so technically inclined. The point is Blockchain technology is transforming how we do business and it is moving fast.
Here’s a simple real-Life Example to help you digest how it works in simple terms.
Most of us frequent cafes for our cafe latte fix, right?!
Imagine you're at a coffee shop (Layer 1 blockchain) and want to pay for your coffee using cryptocurrency (which many of us are already doing) Instead of making a direct payment on the main blockchain, which might take a while to process, the coffee shop uses a Layer 2 solution. They quickly confirm your payment through the Layer 2 blockchain, and only occasionally update the main blockchain with the total transactions made throughout the day.
In this example, the Layer 2 solution helps you pay for your coffee much faster, while the main blockchain keeps track of the overall accounting.
You can see how beneficial this can be at point of sale for service providers and customers as cryptocurrency becomes mass adopted.
In summary, Layer 1 is the main blockchain where everything is stored, while Layer 2 is a faster, more efficient layer that helps process transactions and reduces congestion. Together, they create a smoother and more scalable blockchain ecosystem.
We can help business owners, decision makers and investors become more informed and aware of the possibilities the technology provides.
Learn more at https://www.dbm.academy/
Blockchain is the future, don’t get left behind.