Introduction to Layer2 – a new dynamic for cryptocurrency exchanges?

Blockchain is a scalable technology that can provide modern technological solutions to many problems, and it is constantly evolving. The growing interest in cryptocurrency exchanges and digital assets in general has led to a surge in blockchain activity. While this is a positive phenomenon, it also has its drawbacks. For example, when the blockchain is congested, it sometimes takes longer to complete transactions.

At Bintense, we have a habit of regularly informing our users about relevant blockchain topics because we are a customer-oriented cryptocurrency exchange. That’s why today we want to talk about Layer2 and explain this concept in simple terms. Although it sounds complicated at first, we hope it will be easier to understand.

Layer2 for beginners

In cryptocurrencies, think of Layer 2 as a fast lane. Imagine that the main path is a blockchain where all transactions are checked and added. However, sometimes, when there are a lot of people travelling, it gets congested.

“Layer2 is like a special shortcut to help ease traffic. It takes some transactions off the main path and processes them quickly without clogging up the main blockchain. This way, transactions are again carried out faster and with lower fees. This makes the whole cryptocurrency journey smoother and more efficient for everyone involved.

“Layer2 on the Ethereum blockchain

In this context, Layer2 in the context of the Ethereum blockchain, which is a cryptocurrency available through the Bintense cryptocurrency exchange, is a mechanism for increasing efficiency. Consider the Ethereum network as the main backbone for various activities. The network nurtures tens of thousands of cryptocurrency projects. Naturally, the volume of activity has increased exponentially over the last few years.

To avoid transaction delays (which can affect Ethereum prices), Layer2 creates an additional channel that relieves this congestion by diverting certain tasks away from the core network. All transactions are as secure as the blockchain itself, and are verified through it, so there is no need to worry about breaches and hacks.

Added value for cryptocurrency exchanges?

We believe that the overall experience of using an online cryptocurrency exchange should be safe and fast. At Bintense, we have optimised our infrastructure and continue to do so on a regular basis, keeping it user-friendly.

As the demand for cryptocurrencies increases, the blockchain needs to process larger flows, which is where Layer2 can provide the most value. By moving some tasks off-chain and using the core network for critical tasks, Layer2 is helping the industry to mature, adapting to growing activity.

This improved performance encourages wider deployment as users can interact with the blockchain quickly and cost-effectively. In addition, Layer2 solutions can support a wide range of use cases, from decentralised applications to complex smart contracts, without compromising the security and decentralisation properties of the underlying blockchain.