It has been almost fourteen years since Bitcoin introduced the world to blockchain technology. Its whitepaper presented the blockchain as an alternative to peer-to-peer payments. Since then, blockchain technology has grown into something with the potential for much more.
Blockchains use a combination of different technologies to process transactions and store data. These include cryptography, game theory modeling, and peer-to-peer networks. Cryptography involves encoding and decoding data, while game theory uses mathematical models to study strategic decision-making. On the other hand, peer-to-peer networks allow for transactions without the need for an intermediary.
These technologies work together to create a trustless system for transactions. It is secure, transparent, and decentralized, like the Bitcoin whitepaper envisioned. And, as blockchain adoption increases, they have had to evolve to meet the growing needs of users. This has led to the development of different blockchain technologies.
Generally, blockchain technology can be broken down into layers 0, 1, and 2. Each layer contributes different functionality to the ecosystem. This can be through providing basic security, scalability, interoperability, development, and other functions.
But what exactly do these layers mean and how do they tie into the evolution of blockchain technology?
