What Is Layer 2 (Secondary Layer)?

Layer 2 in Bitcoin denotes a secondary protocol built atop the primary Bitcoin network to enhance scalability and transaction speeds without compromising Bitcoin's core security principles. Originating from Bitcoin's increasing need for efficiency as user adoption grew, Layer 2 solutions operate by handling transactions off the main Bitcoin chain, typically bundling multiple transactions together. This approach streamlines operations and reduces congestion, resulting in faster, more affordable transactions. Periodically, these bundled transactions are confirmed on the primary Bitcoin network. An example of a Layer 2 solution is the Lightning Network (LN), which facilitates instantaneous Bitcoin transfers.