Part 4/12:
Thus, layer solutions must balance these trade-offs, maintaining the integrity of Bitcoin's core attributes while enabling increased utility.
Layer Classification: Are They All "Layer 2"?
The hosts agree that terms like “layer 2” are fuzzy, as some protocols, such as Liquid or Wrapped Bitcoin (WBTC), can be considered side chains—distinct blockchains pegged to Bitcoin—while the Lightning Network functions more as a payment channel layer.
- Layer 2 thus broadly includes off-chain transaction mechanisms that settle or interact with Bitcoin’s main chain, often with varying degrees of trust and decentralization.
In essence:
- Bitcoin main chain: the base, trustless security layer.