What is a Layer 1 Blockchain and How Does it work?

If you’ve been curious about blockchain technology, you’ve probably heard the term “Layer 1” thrown around. But what exactly is a Layer 1 blockchain? In this blog post, we’ll break it down in simple terms so you can better understand this fundamental layer of blockchain technology.

A blockchain is a distributed digital ledger that records transactions in a secure and tamper-proof manner. In the world of cryptocurrencies and blockchain technology, Layer 1 refers to the underlying protocol on which the blockchain is built. It is the foundation of the blockchain, and it determines the characteristics of the blockchain, such as its speed, scalability, and security.

Layer 1 blockchains are the first layer of the blockchain protocol and are the most fundamental layer of a blockchain. They provide the infrastructure that supports the entire blockchain network and is responsible for creating and verifying new blocks in the blockchain. 

Layer 1 blockchains are the core layer of the blockchain architecture and are designed to provide the fundamental functionality of the blockchain.

How Does Layer 1 Blockchain Work?

Let’s say you want to transact with a crypto token. Opening a crypto wallet is the first step in accomplishing this. The private key associated with your public key is safely stored in this wallet. This key is connected to every transaction and cryptocurrency token you own.

You need to add cryptocurrency tokens to the wallet after you open it. You can attain this by buying them on a cryptocurrency exchange and adding them to your wallet. The receiver of your tokens’ public key must then be obtained. Enter this key, the number of tokens you want to send, and then confirm the transaction.

Soon the transaction will be verified and completed.

The transaction is added to a “block,” or group of transactions, once it has been completed. A blockchain is created when each block is cryptographically secured and connected to the block before it.

The block is then added to the blockchain as finalized after network validators confirm its validity. Then, as payment for their time and effort, they get new crypto tokens.

What are the Components of Layer 1 Blockchain?

Consensus Mechanism:

A decentralized system, a blockchain is. There is no central authority that can confirm the legitimacy of a transaction. Blockchains employ a consensus mechanism like proof of work or proof of stake to combat this.

In this system, network users themselves take part in transaction validation. As a result, they have the opportunity to add transactions to the blockchain and receive compensation for the services they render.

Data Structure:

Another name for blockchain is “Distributed Ledger.” This implies that its information is kept as a publicly accessible ledger that documents each transaction carried out on the blockchain. Each blockchain “node,” or computer, maintains a copy of this ledger. The general public can quickly view and utilize it.

Cryptographic Primitives:

This part is in charge of data security. A strong security system is crucial because data is shared and stored on thousands or millions of systems. Blockchains achieve this using cryptographic techniques.

Asymmetric key cryptography is used by the majority of blockchains to secure the network. The public and private keys you use for this serve as your username and password for the blockchain. On a blockchain, all transactions and data are encrypted and linked using these keys.

What are the Examples of Layer 1 Blockchain?

Bitcoin: The foundation of the cryptocurrency world:

Bitcoin is the most popular and widely-used cryptocurrency. It functions on a proof-of-work(POW) consensus mechanism. POW verifies new blocks via an algorithm that uses a computationally-intensive, cryptographic puzzle. 

Because of this, bitcoin has been considered one of the most secure and decentralized platforms since its inception in 2009. But processing one transaction can take 10 minutes to an hour — leaving little time for users to make purchases or send money around the world.

Bitcoin’s layer 1 is the underlying architecture that secures the world’s largest cryptocurrency — and it includes many innovations that have made it possible for bitcoin to become what it is today: a truly global payment network with no central authority.


 This decentralized platform runs smart contracts that are self-executing and verify transactions as long as all pre-set conditions are met. Originally, Ethereum worked off of a proof-of-work consensus mechanism but recently transitioned to a proof-of-stake verification method in a move that would reduce its energy consumption by about 99.95 percent according to its website.

The mainnet and the proof-of-stake sidechain are known as the Merge, which took place on September 15th.


Algorand is an alternative layer 1 blockchain option, operating using smart contracts. It differs from Bitcoin and Ethereum by its use of a pure proof-of-stake consensus mechanism. The method selects miners, or block validators randomly to directly decentralize the verification process.

Algorand separates itself from the two main players by having no pre-mined coins and no mining rewards. Instead, it rewards users with an interest rate based on their stake in the network. The higher your stake, the more you’ll earn from Algorand’s native token (ALG).


Cardano is one of the first layer 1 blockchain to implement a ‘Proof-of-Stake’ model. It is known for its high degree of decentralization, cheap operational fees, and ability to generate passive income for its users from ADA, its native coin. It outperforms Ethereum’s transaction speed by a tremendous margin of 250 transactions per second to Ethereum’s 15.

What are the Advantages of Layer 1 Blockchain? 

Blockchain technology has been around for a while now, but it’s only recently that it has become more popular. This is because of the benefits that come with decentralization, immutability, and security.


Decentralization means that there is no single authority that can make changes to the network. Each user has authority in these changes. The result is an open-source system where anyone can contribute to its development and use.


Immutability refers to the fact that once a transaction has been made, it cannot be reversed. Information present on a blockchain can’t be altered or deleted. This is what makes the system more reliable.


Blockchains’ cryptographic encryption makes them extremely secure. For many users, this makes them a worthwhile investment.

What are the Disadvantages of Layer 1 Blockchains?

Layer 1 Scaling:

Due to using the Proof of Work (PoW) consensus mechanism, Bitcoin requires a lot of computational resources. This makes it difficult to scale up and down as needed, and it also slows down transaction confirmation times when there are more transactions than can fit in the blockchain.

PoW does ensure decentralization and security. But, PoW networks slow down considerably every time there’s a high increase in transaction volume. This also results in increased transaction confirmation times making fees more expensive. 

The primary goal of any blockchain is to optimize these three things to make sure that your network remains secure and robust- decentralization, security, and scalability. However, this balance is hard to achieve, and the concept of achieving all three is called the Blockchain Trilemma.

Solving the Blockchain Trilemma:

Even after years of work on scalability solutions by Blockchain developers, there is a lot of debate going on regarding the best alternatives. Some of the methods for layer-1 scaling include:

Changing the consensus mechanism:

Proof of Stake is a method of consensus that allows a user to stake tokens to validate transactions on the network. It is more energy efficient than Proof of Work and has lower transaction fees, making it an ideal choice for blockchains that require scalability.

PoS systems rely on participants staking collateral to validate new blocks of transaction data based on their discretion. This means that if someone wanted to cheat the system, they would need to have more than 50% of the total amount of tokens at stake at all times for their blockchain node to be considered valid by other nodes on the network. 

This makes it difficult for cheaters to cheat without being noticed by other users who are watching their actions closely through blockchain analytics tools.

Energy Consumption:

Proof of work Blockchains are known to use a lot of energy. They also use a lot of electricity because they need powerful computers running all the time to solve cryptographic puzzles. Proof of stake blockchains help a lot with this issue.

Sharding of Layer 1 Blockchain:

Sharding is a process of dividing a network into shards, which are then distributed across multiple nodes. This improves transaction speed and helps to distribute workloads. Each shard manages its transactions, nodes, and blocks.

With Layer blockchain sharding, nodes report the finished work accounts to the main chain. They also share local data status such as address balances and other metrics. Here no single node is required to keep a copy of the entire blockchain. Ethereum 2.0, Zilliqa, and Tezos are some of the very prominent blockchain protocols that experiment with shards. 

Increasing block size: 

With bigger blocks, more transactions can “fit” into each block, increasing the speed of the network. The problem with this is that computers (nodes) securing the network have to increase their hardware requirements, risking centralization.

The solution? 

Increase the size of each block by including more transactions in a single batch. This would allow for more transactions to be processed per second without requiring an increase in computing power or bandwidth requirements.

Final thoughts: Future of Layer 1 Blockchains

Blockchains at layer 1 are here to stay. They are the most well-known type of blockchain and have revolutionized both technology and finance. If Bitcoin networks are to compete with traditional financial systems, scalability is the only way to go. A good network requires accommodation of growth in terms of users, transactions, and other parameters.

There’s a whole new generation of Layer 1 blockchains — for instance, Solana, which aims to solve the scalability problem. The main idea behind Solana is that it uses sharding (splitting up transactions into smaller pieces) to make it easier for miners to process multiple transactions at once. This should help them process faster than they would otherwise because they don’t have to wait for all of them to complete before starting another batch of work.

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