Questions have been raised as to whether bitcoin is becoming a multi-layered system. Well, the answer is yes. This article aims to outline the different layers on top of bitcoin. It’s all yours!
Have you heard of people referring to bitcoin as digital gold? Clearly, cryptocurrency is rapidly gaining popularity and acceptance in the crypto world. The value of the coin is estimated to rise higher. However, it is noted that the coin can gain or lose 50% of its value overnight. This causes speculation among investors, but the coin is still “digital gold”. And to know whether bitcoin is a multi-layered system or not, it is necessary to know that bitcoin is in two main layers. These are semantic mining and layering.
Mining layer
This is the layer where the coin is created. In addition to bitcoins, ether is also created in this layer. After coins are created, blocks of valid bitcoins are transferred to the ledger. Here, currency creation takes place. It should be noted that the currency is created from transactions in blocks of bitcoins. Blocks are known as transaction fees. The currency can also be generated from the network itself, or you can say “out of thin air”. The main advantage of generating currency from the network is that it provides incentives to miners.
Semantic layer
This provides a very important platform. The semantic layer is the layer where bitcoins are used as a means of payment. It also provides a platform to use Bitcoins as a store of value. The layer seems very important, doesn’t it? Holders of Bitcoin currency sign valid transactions, which indicate that they begin transferring bitcoins between nodes in the semantic layer. Transfer can also be made possible by creating smart contracts. Smart contracts transfer coins between different accounts.
Lightning Network
You probably don’t know about the lightning network. It is the latest invention that has been popularized by the Bitcoin community. This layer will have the ability to run on top of bitcoin. With this invention will come an application layer on top of bitcoin. It will be very exciting. The most interesting aspect is that its value can also be used to make payments. This will be possible by transporting its value between people. With the invention of the lightning network, bitcoin will become the transport layer as well as the application layer.
As of today, the value of bitcoin is estimated to be around 9 billion USD. It is also known that bitcoin is a decentralized cryptocurrency. This means that it operates without the control of a bank or administrator. Bitcoin is surely taking the crypto world by storm.
It is also important to note that the technology used in bitcoin mining is called blockchain technology. It works by enabling the distribution of digital information, not copying. Cryptos are really an exciting topic and in the near future bitcoins may overtake our major currencies.