In this digital era, when crypto assets are continuously gaining traction, it is important to understand the technology behind them. While assets like Bitcoin, Ethereum, Doge etc. are well known, not everyone grasps the complexities and functions of Blockchain technology. Moreover, with rapid advancements, crypto is no longer limited to being a transactional asset. Nowadays, there are several tailored solutions related to real-world applications. In this article, we’ll delve into five fundamental blockchain protocols that every crypto enthusiast should understand. Enhancing your understanding of this foundational technology can enable you to make wiser decisions.
But first, let’s clarify what we mean by a blockchain protocol.
What is a Blockchain Protocol?
Blockchain protocols are the guidelines or a rulebook which determines how a blockchain works. Blockchains are decentralised networks which are connected through a network of computers or nodes. Protocols are the guiding principles which decide how these nodes share data with each other and with the larger network.
Every blockchain network operates under a distinctive set of rules that intricately govern the actions of miners, stakers, voters, and investors. These rules provide direction on various aspects, including consensus mechanisms, blockchain development activities, and other related operations.The rules of a blockchain are also key factors to empower investors to make fundamentally sound decisions in investing in blockchain projects.
Read more: What is Crypto Staking
Furthermore, protocols have a direct influence on both network performance and security provisions. These elements serve as the essential operational components of the blockchain, making it important for individuals to remain well-informed about their significance. Below, you’ll find a list of well-known blockchain protocols for your reference.
Five Types of Blockchain Protocols Which are Widely Accepted
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.
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.
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.
Decentralised Autonomous Organisations( DAO) 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.
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.
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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