The crypto landscape is changing quickly, with ongoing innovations fueling the sector’s growth. Understanding the fundamentals is crucial before stepping into digital asset investments. At the core of the crypto space is blockchain technology, which facilitates decentralised transactions. Since the launch of Bitcoin in 2009, both blockchain and crypto have seen significant progress. These breakthroughs enable direct lending, borrowing, trading, and investing. Moreover, blockchain supports decentralised applications, broadening their influence and potential.
This article will explore five essential blockchain protocols that every crypto enthusiast should familiarise themselves with. Deepening your knowledge of this foundational technology can empower you to make more informed choices.
What is a Blockchain Protocol?
Blockchain protocols serve as the set of rules or guidelines that dictate how a blockchain operates. Blockchains are decentralised networks that rely on a system of computers or nodes to stay connected. Protocols define how these nodes communicate with one another and the broader network.
Each blockchain network follows a unique set of rules that govern the actions of miners, stakers, voters, and investors. These rules offer guidance on various elements, such as consensus mechanisms, blockchain development, and other related functions. The rules of a blockchain are also crucial for investors, as they help guide sound investment decisions in blockchain projects.
Moreover, protocols directly impact the performance and security of the network. These factors are fundamental to the blockchain’s operation, making it essential for individuals to be well-versed in their importance. Below, you will find a list of prominent blockchain protocols for reference.
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Five Types of Blockchain Protocols Which are Widely Accepted
Hyperledger
Hyperledger is a highly reputed protocol which powers enterprises to develop blockchain-based solutions specific to their needs. Industry giants like JP Morgan and Samsung have leveraged this technology for developing business applications. Several Hyperledger projects have graduated from an incubation stage and have caught fame. Namely: Hyperledger Besu, Hyperledger Fabric, Hyperledger Indy, Hyperledger Indy, Hyperledger Iroha, and Hyperledger Sawtooth. Each version has its possibilities.
Hyperledger also has an extensive library which can help developers build applications. The solutions are crypto-agnostic which means the functionality of the blockchain does not depend on the price of crypto.
This infrastructure provided by Hyperledger makes it one of the most sought-after blockchain solutions in the industry.
Multichain
It is a blockchain protocol built for communication within organisations or between organisations. Multichain provides solutions for private blockchains. Multi-chain provides an API which can be utilised for the development of blockchain solutions. According to the multi-chain website, it cuts down the development time by almost 80%. Unlike public blockchains, blockchains built using Multichain offer complete control over the blockchain and hence it is most suited for organisations to deal with high-privacy financial transactions like banking.
Ethereum
The Ethereum blockchain is perhaps the most explored blockchain to date. It allows the creation of Decentralised finance platforms, NFTs, and Smart contracts with various applications. Ethereum is an open-source public blockchain which runs on the Proof of Stake Consensus mechanism. Proof of Stake makes the blockchain hyper-efficient with 99.95% less energy requirement than its previous Proof of Work version.
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Decentralised Autonomous Organisations( DAOs) can build Smart contracts on this blockchain. These DAOs have their constitution, voting methods, tokenomics, treasury and reward system. DAOs exist to build a profitable business or add value to the Ethereum ecosystem while ensuring that the power of decision-making is democratised to all group members. There is an endless list of applications which run on Ethereum. Some of the notable ones include Metamask (a crypto wallet), Brave Browser (A web browser which is giving tough competition to Google Chrome) and many more.
Quorum
It is an open-source solution for companies in the finance sector. It is backed by JP Morgan, one of the largest private banks in the world. It enables the use of Ethereum to build applications for specific uses. Quorum blockchain service can be run through a Microsoft Azure account and can be easily deployed from the Azure marketplace. This enables enterprises to build blockchain services in the cloud.
Corda
It is an open-source project which enables interoperability, which is the power of exchanging information between various blockchains. Transactions performed using Corda are transparent and highly anonymised at the same time. While its solutions are tailored towards banking, several integrations of Corda can make it a dependable solution for any application. It is accredited by the R3 banking consortium making it a marquee name for blockchain solutions for banking.
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