What is Layer 1? An explanation of the blockchain technology that underpins virtual currencies
introduction
In the crypto world, “Layer 1” refers to the basic infrastructure layer of a blockchain. This layer forms the blockchain’s basic protocols and rules and is responsible for processing and recording transactions. Today, major blockchains such as Bitcoin, Ethereum, Cardano, and Solana fall into this Layer 1 category.
Key Features of Layer 1 Blockchain
Bitcoinis the first cryptocurrency to use Proof of Work (PoW). While it has high security and widespread recognition, it has issues with transaction speed and scalability.Ethereumwas the first blockchain to run smart contracts and is currently in the process of migrating to Proof of Stake (PoS).Cardano,SolanaIt also employs its own consensus mechanism and offers different characteristics, such as faster transaction throughput and lower fees.
The Importance of Layer 1 and Its Challenges
Layer 1 blockchains enable the exchange of digital assets in a secure and reliable way, enabling things like digital currencies, smart contracts, and decentralized applications (DApps). However, they have challenges in terms of scalability and speed, which is why Layer 2 solutions are being developed to solve them.
Characteristics of each layer 1
| Virtual currency | Features |
|---|---|
| Bitcoin (BTC) Details | The first cryptocurrency to use Proof of Work (PoW), it has high security and widespread recognition, but has issues with transaction speed and scalability. |
| Ethereum (ETH) Details | The first blockchain to execute smart contracts. It originally used PoW, but is moving to Proof of Stake (PoS) in Ethereum 2.0. It offers high flexibility, but can be problematic due to high fees and network congestion. |
| Cardano (ADA) | It is a "third generation" blockchain that was developed using a research-based approach, using the PoS consensus mechanism "Ouroboros" and aiming for high scalability and sustainability. |
| Solana (SOL) Details | It is known for its fast transaction processing capabilities and low fees. It uses a unique consensus mechanism called "Proof of History (PoH)" and is increasingly being used, especially in the decentralized finance (DeFi) and NFT markets. |
| Tron (TRX) | A fast and scalable blockchain platform focused on content sharing and entertainment. |
| Binance Coin (BNB) | A utility token based on the Binance Chain, primarily used to pay trading fees on the Binance Exchange. |
| Avalanche (AVAX) | It features fast transaction processing capabilities and low fees, making it suitable for building custom blockchain networks. |
| Kronos (CRO) | Crypto.com's blockchain is focused on high-speed transactions and ecosystem expansion. |
| Hippopotamus (KAVA) | A blockchain for providing DeFi applications and services, based on the Cosmos Network. |
| Torchain (RUNE) | A decentralized liquidity protocol that enables token swaps across different blockchains. |
| Sui | A new blockchain that aims for high performance and scalability. |
| CELO | Blockchain aims for financial inclusion by adopting a mobile-first approach. |
| Ronin (RON) | A sidechain designed specifically for Axie Infinity games. |
| Hedera (HBAR) | A distributed ledger technology that features high-speed transactions and low fees and uses the "Hashgraph" consensus. |
| Internet Computer (ICP) | A project that aims to create a decentralized internet, providing high scalability and computational power. |
Layer 1 Market capitalization and supply data
| Virtual currency | Current Market Cap (USD) | Diluted Market Cap (USD) | Total Supply | Maximum supply | Ranking |
|---|---|---|---|---|---|
| Bitcoin (BTC) | 42,703 | - | - | 21,000,000 | 1 |
| Ethereum (ETH) | 2,551.98 | - | - | - | 2 |
| Cardano (ADA) | 0.542937 | - | 45,000,000,000 | 45,000,000,000 | 7 |
| Solana (SOL) | 96.64 | - | - | - | 5 |
| Tron (TRX) | 0.116222 | - | 100,850,743,812 | - | 14 |
| Binance Coin (BNB) | 302.19 | - | 170,532,785 | 170,532,785 | 3 |
| Avalanche (AVAX) | 36.06 | - | - | - | 10 |
| Kronos (CRO) | 0.00010174 | - | 30,263,013,692 | 100,000,000,000 | 25 |
| Hippopotamus (KAVA) | 0.763476 | - | - | - | 59 |
| Torchain (RUNE) | 4.58 | - | - | - | 45 |
| Sui | 1.25 | - | - | - | - |
| CELO | 0.787374 | - | 1,000,000,000 | 1,000,000,000 | 71 |
| Ronin (RON) | 1.81 | - | - | - | 94 |
| Hedera (HBAR) | 0.080018 | - | 50,000,000,000 | 50,000,000,000 | 32 |
| Internet Computer (ICP) | 13.29 | - | - | - | 27 |
In this table, market cap figures are approximate and may vary slightly due to market fluctuations. Rankings are based on market cap and change frequently.
Layer 1 data (approval method, listing date, etc.)
| Virtual currency | Approval Method | Listing date | Central Authority | Proponent | Official website URL |
|---|---|---|---|---|---|
| Bitcoin (BTC) | PoW | 2009 | None | Satoshi Nakamoto | bitcoin.org |
| Ethereum (ETH) | PoW (currently transitioning to PoS) | 2015 | None | Vitalik Buterin | ethereum.org |
| Cardano (ADA) | PoS | 2017 | None | Charles Hoskinson | cardano.org |
| Solana (SOL) | PoH | 2020 | None | Anatoly Yakovenko | solana.com |
| Tron (TRX) | DPoS | 2017 | None | Justin Sun | tron.network |
| Binance Coin (BNB) | PoSA | 2017 | Binance | Changpeng Tsao | binance.com |
| Avalanche (AVAX) | PoS | 2020 | None | Emin Gün Silla | avalabs.org |
| Kronos (CRO) | POA | 2018 | Crypto.com | - | I crypto.co |
| Hippopotamus (KAVA) | PoS | 2019 | None | Brian Carey | kava.io |
| Torchain (RUNE) | PoS | 2019 | None | - | thorchain.org |
| Sui | - | - | - | - | - |
| CELO | PoS | 2020 | None | - | celo.org |
| Ronin (RON) | - | - | Axie Infinity | - | - |
| Hedera (HBAR) | Hashgraph | 2019 | None | Lehman Baird | hedera.com |
| Internet Computer (ICP) | Chain Key technology | 2021 | None | Dominique Williams | dfinity.org |
This table includes information on approval method, listing time, central authority, sponsor, and official website URL, but these are based on general information. For the latest information, please refer to the official website of each cryptocurrency or other reliable sources.
Reference source:COINGEKO