Architecture of the Bitcoin Network
đ Bitcoin Network
Layer 1 forms the base layer with the blockchain, nodes, and miners. Layer 2 and adjacent extensions increase scalability and efficiency, for example through Lightning and sidechains such as Liquid.
đ§ Liquid Network
Sidechain for fast and confidential transactions of large amounts. Bitcoins are locked on the main chain and moved as L-BTC on the Liquid sidechain. Secured via a federation, with conversion back to Bitcoin possible.
⥠Lightning Network
Layer-2 solution for micropayments. State channels enable many fast off-chain transactions between two parties, before only the final balance is settled on Bitcoin Layer 1.
đ State Channels
Off-chain channels for fast, private micropayments within the Lightning Network.