Bitcoin's (CRYPTO:BTC) journey to address scalability challenges and transaction efficiency has led to the emergence of layer two (L2) solutions.

These secondary protocols built atop the Bitcoin blockchain aim to boost throughput, reduce fees, and introduce smart contract capabilities.

L2 solutions, such as state channels, sidechains, and rollups, process transactions off-chain before settling them on the main Bitcoin network, offering near-instant confirmations and enhanced privacy features.

Despite their advantages, Bitcoin L2 networks face challenges in secure bridging, settlement speed, and maintaining decentralisation.

However, their potential to unlock new applications and improve the overall Bitcoin experience underscores their importance in the cryptocurrency ecosystem.