Definition ∞ Bitcoin Layer 2 is a protocol built on top of the main Bitcoin blockchain. These secondary networks aim to enhance Bitcoin’s transaction capacity and speed by processing transactions off-chain. They settle groups of transactions back to the primary chain, thereby reducing congestion and lowering fees on the base layer. This approach maintains the security of Bitcoin while extending its functional capabilities for broader application.
Context ∞ The current discussion surrounding Bitcoin Layer 2 solutions centers on their potential to scale the network without compromising its core decentralization or security properties. Debates often focus on the trade-offs between various Layer 2 designs, such as the Lightning Network or sidechains, concerning their efficiency, trust assumptions, and adoption rates. Future developments will likely involve continued innovation in these scaling technologies, seeking to support a wider array of decentralized applications and payment channels.
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