Stefan King joins the Greater Finance podcast for an episode on Bitcoin Layer 2s, something he says is the "Next evolution of blockchains". With the Internet, we are able to send a massive amount of information thanks to its layered structure. You can think of the Network (IP) as one layer, and Transport (TCP) as another layer. Without this structure, the way we exchange information today would not be possible.
Bitcoin enables value to be exchanged in the same way information is exchanged over the internet today. As easy as it is to send a Facebook message to a friend in Australia, you can now send money as easily by using the Bitcoin network. Bitcoin is a non-discriminatory and censorship resistant network in which everyone in the world is allowed to participate.
However, Bitcoin's Layer 1 is extremely limited in scope on how many transactions per second it can make due to its limited block size. This limitation in block size is what enables the Bitcoin network to be non-discriminatory and censorship resistant, but it's also the key to its transaction limitations.
In order to become the "internet of value" in which all of the world's population can store its value and make transactions with, it needs to scale its transaction capability. This is where Layer 2s come into play.
In this episode, Stefan King is making the case for Bitcoin Layer 2. He presents the basics before I challenge him with some common problems touted as big hurdles for the most successful Layer 2 implementation to date, the Lightning Network. We wrap it up by taking a closer look at El Salvador, a real use case where the Lightning Network is widely used today.
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