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Last week, crypto exchange giant Coinbase announced that they are launching BASE, which is their own blockchain. So what is BASE, and why did Coinbase think it was necessary to create yet another blockchain?
Let’s dig in.
BASE is what is commonly referred to as a Layer 2, or L2 blockchain. This simply means that it exists on top of an established blockchain, Ethereum in this case. These L2 chains are complicated solutions for an unfortunate problem: Ethereum is way too slow and expensive to be considered usable in most cases.
The way this works is a bit like elevators. Think of Ethereum as an elevator that stops at every level of a skyscraper. At the end, you are certain you didn't skip a floor because you saw that door open and close many times, but it takes a long time to get all the way to the top. Level 2 chains skip a bunch of floors instead, taking you up more quickly. The tradeoff is that you can't really verify how far you actually went until you look out of the window.
But what Coinbase is doing here is nothing new. People have been trying to mitigate Ethereum's problems for a long time now, for example, the popular Polygon blockchain. So why is Coinbase seemingly reinventing the wheel here?
We suspect this is about having a shot at directing where the industry will go. Coinbase has been under a lot of pressure lately. Most of its customers are using Coinbases' accounts to store their crypto - which means it could be gone in case of bankruptcy or hacks. Coinbase likes it this way, but sees the writing on the wall - as everyone is moving their money into wallets they control themselves, Coinbase needs another way to stay relevant. And what's more relevant than building the highway people drive on?
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