Questions have arisen over whether Bitcoin is shifting to a multilayered system. Well, the answer is yes. This article seeks to outline the different layers Bitcoin lies in. it’s all yours!
Have you heard of those who refer to Bitcoin as digital gold? It is clear that cryptocurrency is rapidly gaining popularity and acceptance in the crypto world. The coin is destined to increase in value. However, it is also noted that the coin can gain or lose 50% of its value overnight. This is causing speculation among investors but the currency is nonetheless “digital gold”. Regarding the question of whether Bitcoin is a multi-layered system, we must know that Bitcoin exists in two main layers. These are the mining and semantic layers.
This is the layer in which the coin is created. Besides bitcoins, ether is also generated in this layer. After the coins are created, the valid blocks of bitcoin are transferred to the ledger. Here, the currency is generated. It should be noted that the currency is generated from transactions in bitcoin blocks. The blocks are known as transaction fees. The coin can also be created from the network itself, or you can say “out of the blue”. The main advantage of generating currency from the grid is that it provides incentives to miners.
This provides a very important platform. The semantic layer is the layer in which Bitcoin is used as a payment method. It also provides a platform for using Bitcoins as a store of value. Layer looks very important, right? Bitcoin holders sign valid transactions indicating that Bitcoins are being transferred between nodes in the semantic layer. Transfer can also be made possible by creating smart contracts. Smart contracts transfer coins between different accounts.
You may not have heard of the Lightning Network. This is the most recent invention released by the Bitcoin community. This layer will be able to operate on Bitcoin. With this invention, an application layer would come 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 transmitting its value among people. With the invention of the Lightning Network, Bitcoin would become a transport layer as well as an application layer.
As of today, Bitcoin is estimated to be worth roughly $ 9 billion USD. Bitcoin is also known to be a decentralized cryptocurrency. This means that it operates without the control of a bank or an official. Bitcoin is definitely dominating the crypto world.
Also importantly, the technology used during Bitcoin mining is called blockchain technology. It works by allowing digital information to be distributed, not reproduced. Cryptocurrencies are a really exciting topic and in the near future Bitcoin may overtake our major currencies.