Understanding the limitations of Layer 1 networks

Layer 1 blockchains like Bitcoin and Ethereum are the foundation of blockchain technology, focusing primarily on security and decentralization. However, these priorities come with significant trade-offs:

• Speed limitations: Layer 1 networks can be slow because they require consensus from all participating nodes. Bitcoin, for example, produces blocks approximately every 10-12 minutes.
• High transaction costs: Due to limited block space and high demand, transaction fees can become prohibitively expensive. At times, sending Bitcoin can cost around $40 in transaction fees.
• Scalability challenges: As Layer 1 networks prioritize security and decentralization, they sacrifice transaction throughput and user experience.

These limitations make Layer 1 networks impractical for everyday transactions and applications that require fast and affordable processing.