Blockchain technology is a combination of about three different systems to create a compact structure that takes advantage of the strengths and weaknesses of all three systems. According to Simplilearn, these systems are "cryptocurrency keys, a peer-to-peer network containing a shared ledger – a computational means of storing the network's transactions and records"

This combination brings flexibility and provides a way to create, share and store data. However, this combination is not perfect because most of the time, the blockchain platform being created must deal with the trilemma in the system. The two elements of the trilemma are scalability and security.

In order to find a way to make blockchain technology easy to use for everyday activities, more flexible and scalable blockchain platforms need to be built as layers 2 and 3. This ease of use is related to the scalability and security of the system. So currently we have roughly 3 types of blockchain platforms based on Layer descriptions: Layer 1, Layer 2, and Layer 3.

Differences between layers

Layer 1 blockchains are those systems that are built on the "original" blockchain itself, with basic functions such as performing transactions. A typical example is Bitcoin. Layer 2 blockchains, then, are protocols built on top of Layer 1 structures to address speed and cost challenges. Mobility networks and lightning networks are perfect examples of this.

Layer 3 is the simplest use case for blockchain technology. This is where you have games, decentralized financial (DeFi) applications, and distributed storage applications. A very unique capability of Layer 3 blockchains is the cross-chain capability that allows users to interact with more than two platforms or applications.

While progress has been made in creating more Tier 2 and Tier 3 platforms, let's look at some of the top Tier 1 platforms.

Bitcoin

Satoshi Nakamoto launched Bitcoin in 2009, opening up the possibilities of the blockchain. Since then, it has undergone so many forks as developers and users try to find solutions to the network's scalability challenges. It uses working consensus proofs to validate transactions and create new blocks in the Bitcoin ecosystem.

As for being a layer 1 blockchain, it is highly secure and is the hardest to crack. This is one of Bitcoin's greatest strengths. Bitcoin's native token is Bitcoin, represented by BTC, which is trading at just over $39,000 as of March 7, 2022. No more than 21 million BTCs will be mined to control the inflation of the asset.

For scaling and speed capabilities, the Lightning Network has been a major tool that provides a landing point for projects to take advantage of Bitcoin's security without the scaling and speed difficulties of the protocol. As a result, transactions can be completed faster using the Lightning Network.

Ethernet

It launched as a standalone blockchain platform in July 2015. Although, the structure and inspiration behind it came from Bitcoin and other early works. It uses a proof-of-work model like Bitcoin. Ether (ETH) is the platform's native coin.

Ether provides the first opportunity for the blockchain community to build products on the blockchain network. This is where smart contracts come into play, and projects like Polygon are a great example of a blockchain platform built on the Ethernet network.

The main issue with Ether is the consensus mechanism. There are plans to migrate to a proof-of-stake protocol, but there are concerns about decentralization and security. Some transaction fees have been burned since the London fork of Ether, leading to reduced availability.

Algorand

Algorand was founded in 2017, but launched its mainnet and ALGO token two years later. With its pure proof-of-interest mechanism, the blockchain is more secure than other POS platforms. Verifiers are chosen randomly, so it is difficult to predict who will be the best verifier, despite the number of tokens pledged.

The main advantages of Algorand are decentralized structure, shorter validation time, harder forks in the system, less gas costs, community driven, and a very good and experienced team leading the project.

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Caldano

Cardano was created and released by Charles Hoskinson, one of the co-founders of Ether, in 2015 and 2017 respectively. The blockchain using the proof-of-stake Ouroboros consensus mechanism is built with a focus on five distinct phases: foundation, decentralization, smart contracts, scaling, and governance. ADA is the network's native token.

Caldano focuses on enterprise dApps that can help organizations easily access blockchain tools. Examples include Atala PRISM, Atala SCAN and Atala Trace. Some of its advantages include being an environmentally friendly green product with a two-tier architecture that offers greater efficiency than other platforms.

Other advantages are that it uses Caldano clearing levels, allowing users to pay very low fees for trading ADA very quickly. Smart contract functionality is also at play on the blockchain.

Ivy

The project was founded by Dr. Leemon Baird and Mance Harmon. Hedera Hashgraph uses a unique consensus mechanism called Hashgraph Consensus, which works in parallel with POS structures designed to achieve Asynchronous Byzantine Fault Tolerance (ABFT).

This ensures that the timing and sequence of executed transactions is maintained even if the validation process is delayed. HBAR is the platform's native currency.

Hedera is one of the few layer platforms that has no scalability challenges. It has a very fast final determinism of 5 seconds or less, less than a penny transaction fee for smart contract operations, TPS of 10,000, and applies a proof of deletion system for file storage.

Polka Dots

This sharded multi-chain network (which can process transactions from multiple chains simultaneously) was launched in May 2020 by Dr. Gavin Wood, co-founder of Ether; Robert Habermeyer and Peter Chaban. Polkadot is considered to be the blockchain internet, allowing for easy interoperability between chains.

Polkadot has four components: relay chains that create "consensus, interoperability, and shared security across different chain networks," according to coinmarketcap; parallel chains for independent chains that can operate differently; parallel threads for temporary joint security partnerships with other chains, and bridges to connect parallel chains or parallel threads to external blockchain platforms.

Solana

Solana brings for the first time a proof-of-history mechanism for verifying transactions and block production to the entire blockchain ecosystem. It is one of the fastest blockchain platforms and a near replacement for Ether.

Thanks to Anatoly Yakovenko, who is tagged as the main man behind the Solana blockchain. After working with Qualcomm, he founded Solana Labs as a product of the project he was working on. Later, he was joined by several colleagues from the same company.

TPS 50,000 for fast transactions; low transaction fees; one of the largest futures markets; NFT and smart contract compatibility …… are some of the advantages of the Solana network. A major disadvantage is that it is not truly decentralized compared to Ether, which has over 200,000 verifiers.

Coin Smart Chain

Cryptocurrency is an authority in the cryptocurrency space with CEX, a built-in wallet, Launchpad …… all built on the Cryptocurrency Smartchain. The progress made by these utilities clearly describes its capabilities.

The Coin Smartchain was developed when it was discovered that the Coinchain could not provide the best service to its users. BSC is compatible with EVM, allowing developers to move their projects from Ether to BSC to take advantage of the speed of the blockchain.

It uses a proof-of-interest mechanism that allows BNBs to be pledged as part of a network verifier. One of the biggest advantages of BSC is that the ecosystem offers a complete selection of options for anything you want to do. From Cryptocurrency CEX to PancakeSwap and more. Once you reach BSC, you may not need another platform to operate.

Large Area Blockchain

Terra was founded by Daniel Shin and Do Kwon in January 2018 and is launching its mainnet in 2019. The project is inspired by the mass adoption of blockchain technology and focuses on the price and stability of cryptocurrencies.

The native currency is Terra (LUNA), with a new high of $103.3 and a return on investment of 4711.3%. Proof of stake is a mechanism used to protect the blockchain that "attempts to differentiate itself by using stablecoins pegged to fiat currencies," says coinmarketcap.com, by combining "the borderless advantages of cryptocurrencies with the everyday price "the stability of fiat currencies."

CRO

CRO is a product launched by crypto.com in November-December 2018. The team Kris Marszalek, Rafael Melo, Gary Or and Bobby Bao are focused on bridging the gap in the payment system platform for crypto.com users.

Cronos Chain is built on top of the Cosmos SDK, which has a Proof of Authority (PoA) consensus mechanism. It is an Ether Virtual Machine (EVM) that allows projects to successfully move back and forth from Ether, BSC and other EVM-compatible platforms.

In addition to the blockchains mentioned above, Fantom, Centrality, NEAR Protocol, Avalanche, and TRON are other powerful layer 1 structures. While there are some layer 1 blockchains that are well suited for efficient use cases, there is still a need to build more layer 2 and layer 3 structures. This is becoming more prominent as more and more people learn about blockchains.