Every newcomer in crypto has heard about the term protocol, but what is it? And what role does a protocol play in blockchain? Today we will dig deep and try to find answers to our questions!
Computer science students already know it, but for those who don't know, a protocol is a set of rules and guidelines that govern data transmission between two networks or devices. A protocol standardizes how two computers interact, communicate, and how they transmit, receive, and process data.
As you already know, all our traditional financial systems are centralized. But people wanted a way to transfer digital assets where they wouldn't have to rely on central bodies like banks. And that's where blockchain came into the scene.
Blockchain is a distributed and decentralized ledger capable of storing information like transaction data across multiple devices (nodes) within a network. Blockchain eliminated the need for central authorities like banks and gave people full control of their digital assets. But a question still lurks around the corner: is it safe to transfer assets through blockchain? That's where blockchain protocols were introduced to reduce to risks of fraud and establish rules and guidelines that will allow people to complete transactions securely and track their assets.
Blockchain protocols are rules and guidelines that specifically govern blockchain operations. They standardize the process of recording and validating transactions. These protocols govern everything, including the communication and interaction between nodes.
This might get a bit complicated for beginners, but let's try to look at an example to understand how a blockchain protocol works. Let's say there are two users: User01 & User02.
- The first step is about requesting a transaction. Here User01 requests to make a transaction.
- In the second step, a block gets created that will record the transaction details. No one can change the block once it's created.
- In the third step, the block is shared with everyone in the network. It is done to make sure that everyone gets a message about the transaction.
- In the fourth step, nodes verify the transaction to ensure its authenticity. Each node receives a reward for verifying the transaction.
- Once the verification of a transaction is successful, the block is added to the blockchain and the protocol updates it in the database.
- The updated database is distributed across the network to make sure everybody stays updated.
- And after all these steps are executed, the transaction is considered complete.
Every step of this transaction is executed by protocols that constantly ensure that all transactions executed are secure.
Here are some of the most popular examples of blockchain networks:
It was the first cryptocurrency that introduced blockchain to the world. The protocols designed for it also serve as the foundation layer for numerous other cryptocurrencies. It boats p2p transactions, cryptographic hash functions, digital signatures, PoW consensus algorithm, etc.
The second most popular name in the market that help blockchain developers create dApps (decentralized applications) using smart contracts.
It is an open-source blockchain framework designed by Linux for enterprise use. It is used for creating custom blockchain solutions and it aims to help businesses with secure international business transactions.
To sum it up, blockchain protocols are pretty much the backbone of blockchain transactions. There are numerous of them available now, and each of them is unique in its own way. But if you are planning to choose one for your application then you should consider the one that meets your needs. Blockchain protocols hold the key to reshaping how businesses and transactions are done in the digital age.