It is a transcribed excerpt of the “Bitcoin Journal Podcast,” hosted by P and Q. On this episode, they’re joined by Nate of Voltage to speak about how the Lightning Community can switch worth immediately between two events with out having to contain an middleman. The Lightning Community will permit the Bitcoin community to scale exponentially into the funds world.
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Q: What does “Layer 2” imply? May we equate it and provides examples again to the present web infrastructure and the way we work together with that to make it digestible? I discovered that clarification is most useful.
Nate: So the web is decentralized info. Bitcoin is decentralized cash. When the web was first being put collectively by geniuses 40-50 years in the past, they [engineers] had been simply excited to go bits and bytes to completely different school campuses. None of them had any thought of music streaming, video streaming, what we’re doing proper now, none of that was potential.
Totally different protocol layers needed to be constructed on the web on the TCP/IP protocol. I am not an professional on it, however what we’re doing proper now could be interacting with 5 – 6 layers of that base web protocol. That will increase issues like throughput, bandwidth and high quality, all that type of stuff.
So the web is that this layered cake you could visualize. You may Google “web protocol layers,” and I am fairly positive there’s some cool graphics for that. And Bitcoin is just somewhat over 12 years previous now or one thing? Layer 1 is nice. It is very safe. It is immutable, censorship resistant, all these actually cool options. However the throughput has an issue in the event you impose international finance on high of it.
Layer 2 is this concept the place you can do bitcoin transactions with out having to fill the blocks or jam up the pipes of the bottom layer. We might nonetheless have that safety equipment in a means, but additionally get the moment settlement and finality with out having to work together with that [base layer]. Lightning Community is one proposal of that block.
Blockstream has one thing known as the Liquid Community the place you mainly simply switch bitcoin off of the Bitcoin base layer — you are not really doing that, however that helps you visualize it. Lightning is comparable, however completely different as a result of Lightning has this kind of node gossip community system. It is nearly taking the identical idea that labored for the web and making use of it to this new cash as a result of bitcoin is the cash of the web, however it’s additionally the web of cash in that respect.