Bitcoin’s Layers (L1-L3): The Money Revolution Unleashed! | Hashpower Academy

Video Transcript:

one of the age-old debates that is going to happen today and tomorrow in the context of Bitcoin is why is Bitcoin developing into multiple layers and the first key reason for this is what is Bitcoin bitcoin data money and so the context of everything we’re going to talk about today is the the the fundamentals underneath the Bitcoin blockchain but also why new layers are going to be built on top but first let me introduce myself hello there my name is Jake Scandlin i’m the lead educator here at the Hash Power Academy this is a place for you to learn anything and everything to do with Bitcoin and also its underlying network of technologies and commodities now as mentioned the topic of today’s video is going to be looking at the Bitcoin layers and why they’re going to essentially be built into fruition and this is because there is a data constraint that Bitcoin data money has a cost to produce so it’s a database at this layer one level a series of blocks where transaction information that information your bitcoin in wallets and when you want to move it you have to update that information and we don’t want all the information to be centrally controlled in one location like a central bank because money is just a technology of communicating resources in society we don’t want all of that information centrally controlled in one place we want to have we all have to have a copy of the same transaction file distributed among all of the nodes of the world but who gets to hold the pen of that accounting system it’s the Bitcoin miners all seeking to produce energy all around the world or buy it and consume it to convert and produce compute power which adds Bitcoin blocks to the chain that is that most fundamental layer one and so the question becomes well why do we need a layer two and why do you think there’ll be other sorts of layers such as social layers and layer 3es well it all comes down to this the deeper you go in the layers in relation to you as a person communicating to the Bitcoin blockchain whether it’s paying fees to store in this transaction layer 1 that is settlement layer one is really focused on settlement layer two is more about transaction velocity and what I mean by this is what’s the difference between a fast and everinccreasing volume of transactions such as on the liquid and lightning networks um well the difference between that and the layer one is the layer one is constrained by time blocks are every 10 minutes because the network is constantly trying to understand how much Bitcoin mining compute is online at any minute or every uh two weeks shall we say and if more hash rate comes online blocks accelerate so the difficulty adjustment increases to make the cost to add the next block in the chain more difficult and so there is all of these physics constraints to the layer 1 blockchain and the layer 2 wants to essentially accelerate that that is to say that um a lightning a lightning uh network shall we say is uh like a lightning bolt bouncing between different nodes that all of these different nodes of the lightning network are all connected because they’ve they’ve used the layer 1 blockchain to contractually connect a quantity of Bitcoin between these different nodes and if there is a certain balance of Bitcoin between all of these nodes and you want to send some Bitcoin to this person you can just shift the ownership transfer through the system u between you and that person you’re sending Bitcoin to this doesn’t have the limitation of the 10-minute settlement requirement on the layer one so it’s not adhering to Bitcoin’s uh time constrained physics but it’s constrained in data space because the layer 1 blockchain is where that settlement finality is found so when you’re adding Bitcoin in Lightning addresses and accounts you have to communicate with the layer 1 blockchain if you want to settle the amount of Bitcoin in your layer 2 balance so to speak back down to that layer one you have to communicate with the Bitcoin layer one blockchain but that whole aspect is speed so we’re going to just write these in settlement settlement speed of transaction remember Bitcoin data money all of this is a communication of data for example uh we produce energy transfer it over time produce compute transfer it over time produce data money transfer it over time all of this is a communication of data layer one is constrained by energy space and time 10-minute blocks with a cost to produce to update that information that gives Bitcoin its electron value the layer two is breaching that and and lifting constraining that uh that quantity of bitcoin into a layer two so that uh speed uh is reduced from 10 minutes to almost instant this is what we want and the best finance analogy for this is a clearing house is when large institutions essentially settle their transaction information similar to how the Bitcoin blockchain is settling every 10 minutes these institutions can be can be quite quick during the day but it could take multiple days where two banks have got lots of transactions and trade between each other and they do that settlement finality with a clearing house clearing the the transaction volume that they’ve built up between each other and that that sort of place is not where they’re going to itemize the list of a coffee purchase are they they’re not going to uh settle a coffee purchase so where does a coffee purchase reside in these layers it’s going to be the layer two that makes sense because it’s a transaction that’s important enough to be paid but it’s not a large enough amount of money relative to an expensive good for example if you were purchasing a house that is some form of trade and transfer of the ownership of an asset and that settlement of payment to to pay for it that makes sense on the layer 1 blockchain you need some form of ownership transfer that has settlement finality and this also scales to country level that if Bitcoin is a currency based on energy and energy seems like one of those resources that nations invade other nations uh to control their energy resources and that’s to sustain the power of the fiat money system and price it beyond the gold beyond the gold standard um or even the pricing of say dollars to gold once once they removed the dollar from gold uh they needed some other commodities of very important very high importance to uh the world such as energy so we have essentially a decade’s worth of uh oil oil attachment to the money and that’s because if you stimulate and force other nations to exchange their money into dollars to then buy the ver resource that they want oil it gives this arbit it gives this uh artificial value to uh the fiat currency by pricing it in the thing that everyone wants now if electricity is something that everyone wants and Bitcoin has mathematically connected to electricity what do you think the value of Bitcoin is going to be in the future when you’ve got this fixed supply currency with energy and compute expanding underneath it it reprices that fixed supply money against all of the energy in the system and as you arbitrage trade out of the system it makes different participants in the network more profitable so layer three the social layer uh this isn’t quite uh clear at the moment because the layer twos are just about sort of defining um well everyone’s sort of discovering all these different layer 2s but the interesting thing about the layer 2 they need layer 1 block space it is this is most fundamental whether you’re a platform exchange bank hedge fund sovereign wealth institution you name it everyone needs layer one block space which is produced by pools and miners and that layer three is the utmost highest volume of data pictures music other expressions of human creativity not so much needing to be stored in Bitcoin layer 1 block space not so much maybe stored in layer 2 transaction volume where we’re focused on speed but it’s just that aspect of social i apologize for my handwriting and that social layer is going to be uh needing you know the speed of transactions no one’s going to want to post things and uh wait for it to confirm they want to post something in in the social side of things and so these are the sorts of things such as Nosta nosta is quite interesting a sort of decentralized social media where you can store the data that you want to store essentially on your own uh what your posts and whatnot and it’s using things like uh lightning as as a way of people being able to pay each other if you follow someone you like what they say and talk about um that you can send them a few saps a few sats basically or zaps I think they call them um all these sorts of things of that integration of high volume of data versus scarce amount of data for settlement so it’s the the cost to settle the data uh is more expensive the deeper you go and for the reasons that you’ve got all this transactional noise the the higher you go in the layers but interestingly this is exactly the same concept all this sort of transactional noise that I’m referring to is that yeah everything the Bitcoin blockchain expresses like a funnel of data at Ah and everything on the underside of the Bitcoin blockchain is an expression of energy really uh electrical energy digital energy if you want to call hash rate that and so you’ve got this expression of raw fundamental energy that’s most intrinsic to humanity and the communication of energy and data which um wealth is essentially energy so when you go into money and money is basically Money is basically energy so uh yeah that’s an interesting direction of things so I think I’ve overexlained this basically the overall gist of my scribbles here are the Bitcoin blockchain is energy space and time physics and maths in the digital world which is a complete phenomena in of itself and that trifecta that framework of X Y and Zed builds uh builds opportunity to act as uh as Michael Sailor likes to refer to it’s like a digital Manhattan and that bedrock in the digital world allows transactional data expression to expand and building in layers on top as to the decentralization of the different liquid and lightning and all these others i’m quite interested in uh Babylon chain or spider chain or something at the moment and all these other sorts of things um as to how decentralized they are that’s they’re going to have to push to incentivize people to create and generate uh ver cop create a copy of their transaction information and the more people have the same copy of the same files and there’s no single point of failure that’s the centralization on the digital side and then decentralization underneath that’s very much established we do have centralization issues with pools even with miners uh energy sector not so much because that it’s it’s get it gets more decentralized the further you go from the blockchain on either side i think that’s it yeah layer one settlement layer two speed layer three social hope you enjoyed this video um sorry for the scribbles but uh there we are hope you enjoyed comment section is for you send this to the group chat send it to anyone and everyone you think would be of interest to this sort of stuff uh I’m going to do more on these sorts of videos but yeah this is this is it for now goodbye