Before writing about Arbitrum, we must first address a dilemma in the world of crypto ecosystems. That dilemma is actually a trilemma, made up of three different challenges that need to be solved simultaneously. Any blockchain wanting to be efficient, secure and widely adopted needs to meet three key attributes: security, decentralisation and scalability. However, while trying to solve all three, one of these three characteristics will always fall by the wayside. Case in point: Even the popular blockchain Ethereum is no exception to this rule.
Ethereum and the blockchain trilemma
The Ethereum blockchain is considered a model for security and decentralisation, but it has major problems with its lack of scalability. As it was originally designed, Ethereum could only handle about ten transactions per second. For a long time, this wasn't a problem because Ethereum wasn't used that much. However, as its popularity grew and applications were added, the Ethereum network experienced congestion issues arising from the increased volume of transactions (during the NFT hype, this problem was pasrticularly severe). As a result, transactions took an unusually long time when congestion was high, and transaction fees skyrocketed. In some cases, triple-digit dollar fees were charged for a single transaction at peak times. This quickly made the purchase of many NFTs and even many simple transfers uneconomical.
Arbitrum: The layer 2 solution to optimise Ethereum
This is where layer 2 solutions like Arbitrum come in: They take load-intensive operations off the Ethereum blockchain, process them in their own network, and deliver the end result back to the main Ethereum chain, solving Ethereum's scaling problem. If this sounds like outsourcing to you, that's because it is. And just like classic outsourcing, this innovative way of outsourcing increases the efficiency of Ethereum.
It is the full compatibility of the Arbitrum platform with Ethereum that makes it so interesting as a solution to Ethereum's scaling problem. The Arbitrum protocol is fully compatible with the Ethereum Virtual Machine (EVM) and even shares the same programming language as the Ethereum network. Developers can therefore easily port their dApps and smart contracts to the Arbitrum protocol. This saves them time by eliminating the need to learn a new programming language and rewrite large parts of their code.
ARB, Arbitrum's native token
The ARB token is Arbitrum's native token and was launched in an airdrop on 23 March 2023. The ARB token is not a utility token that can be used to pay internal transaction fees. It's a type of token called a "governance token". Governance tokens act as a form of voting rights, allowing token holders to have a say on issues such as the direction of the platform, technical changes and new features. In addition, the ARB token is also used for consensus building and thus for the security of the Arbitrum network. The ARB token is also a tool for investors who want to invest in the Arbitrum platform and participate in its growth and success.
The company behind Arbitrum
The Arbitrum protocol was developed by Offchain Labs, a team of experts in the field of blockchain development, including engineers, developers and researchers. The company has a strong presence in the blockchain community and works closely with other companies and organisations to advance blockchain technology.
If you want to invest in one of the most advanced scaling solutions for the Ethereum blockchain and participate in the success of the Arbitrum protocol, you don't have to look any further. With SMART VALOR, you can easily, quickly and conveniently trade ARB with cryptocurrencies such as Bitcoin and Ethereum. Alternatively, you can trade with fiat currencies such as USD and EUR. All you need to do is log into your account and believe in the success of ARB!