The world of blockchain has been increasing at a rapid pace over the last few years. An initial concept of Bitcoin has since evolved to become a huge ecosystem of various forms of blockchains. In the current times, the future of blockchain technology is taking three primary forms namely Layer 1, Layer 2 and Modular blockchains. All of them are unique in terms of making blockchain quicker, less expensive, and more beneficial to people and enterprises. This topic is quite exciting to me as a follower of crypto and blockchain development since it demonstrates that innovation continues to enhance the current system.

First, we can consider Layer 1 blockchains. These are the primary blockchains that serve as a basis of others. Good examples include Bitcoin, Ethereum, Solana and Binance Smart Chain. The transactions, smart contracts and the rules all occur on the Layer 1 network. The advantage of these blockchains is that they are safe and decentralized. This implies that they are not controlled by an individual or company. There is, however, one major problem that they can have; which is scalability. The larger the number of people using them, the slower the transactions and increased the fees. An example is that Ethereum has been reported to include large gas charges during peak network usage. Nevertheless, the crypto world is still based on Layer 1 blockchains as they are the most reliable and safe.

Developers developed Layer 2 blockchains to address the issue of low speed and high charges. This is a layer 1 based solutions. They are in charge of doing most transactions off-chain and reporting the findings back to the main chain. This renders the process cheap and quick. Layers 2s such as Polygon, Arbitrum and Optimism are based on Ethereum. As I have a Layer 2 blockchain, I experience how fast and smooth it is in comparison with the direct use of the base chain. The charges are cheaper and it renders blockchain more usable in real life applications such as gaming, payments and decentralized applications (dApps). The significance of Layer 2s is that it assists Layer 1 blockchains to be scaled without compromising security.

Image Source

And at this point a new concept emerges which is gaining in popularity Modular blockchains. Modular blockchains separate the work into various different parts unlike Layer 1 and Layer 2 systems that do everything together. Each part does its own job. As an example, one of the layers consists of security, another layer consists of data storage, and another layer consists of transaction processing. Celestia is a good example of a modular blockchain that will only be used to provide data availability and consensus. The new model enables developers to create their own blockchains with minimal effort without creating ones. They are able to select and integrate the modules they require and this makes the entire system more flexible and efficient.

The big question at this point is: Who is going to own the coming decade of blockchain development?

Layers 1 blockchains will never be dismissed due to the foundation. The others can not exist without them. They will also keep being upgraded - such as an Ethereum transition of proof of work to proof of stake - to be greener. But the future is likely to see Layer 2 blockchains taking up a very large role. They are already addressing the actual issues that users have today such as low speed and high cost of transaction. The reason is that Layer 2 networks are easier to use since a lot of new projects are being constructed straight on them.

Conversely, modular blockchains could work out to be the largest changer in the long-term. They are a new perspective on the blockchain design. Modular blockchains are specialized, as opposed to attempting to divide a single chain into all that. This enables them to be even more scaleable and modified to suit various industries like finance, supply chains and even game. It is as if you are constructing something with Lego blocks you can assemble various blocks to form the most ideal system to suit your requirement.

However, in case of prediction, I would state that in the coming decade the type of leadership will not be on one hand but on the hand a combination of all three will be dominant. Blockchains in the 1 layer will remain the powerful foundation. They will be more efficient and cost effective to the users because of layer 2 solutions. And blockchains made modular will introduce flexibility and creativity, enabling developers to create networks at a higher pace and with greater quality. Combining them will create a strong ecosystem that will make blockchain technology more commonplace and apply it to all.

To sum up, the conflict between the Layer 1, Layer 2 and modular blockchains is not exactly a rivalry on who will oust the other. It is related to how they are able to collaborate in driving blockchain. With the current technological development, it is clear that the future of blockchain will be more open, smarter, and faster than ever. And I think that this innovation and collaboration are likely to define the next ten years in the evolution of blockchain.