Difference between Various Blockchain Protocols

The blockchain protocol is a set of rules and standards that define the structure and operations of the network on the principles of decentralization, immutability, and peer-to-peer communication.

Why Does Blockchain Require a Protocol?

It plays a vital role because it describes how nodes in the network communicate, achieve consensus, and validate transactions.

1. It maintains the core principle of the blockchain network.
2. The protocol outlines the rules that govern the creation, validation, and addition of new blocks to the network and ensures a secure and transparent decentralized system.

Different types of Blockchains

Blockchain is a network further divided into Private and Public, which is based on the accessibility of the network, and for the same, it has different protocols and sets of standards and regulations.

Blockchain classification can be based on its main working principle, but generally, it has four types

1. Public Blockchain

• Public Blockchain is also known as the Layer-1 blockchain.
• It is permissionless, so anyone can participate in the network.
• Examples: Bitcoin and Ethereum.

2. Private Blockchain

• Private Blockchain is the only permission blockchain and allows participants to have accessibility to the network
• It is operated by a central entity.
• It is specifically used for companies and cartels to maintain their structure privately.
• Examples: Hybrid finance (HYFI)

3. Hybrid Blockchain

• Hybrid Blockchain is a combination of both private and public blockchain.
• It maintains the layer of accessibility as per use cases
• Examples: Komodo (KMD).

4. Consortium Blockchain

• Consortium Blockchain is also known as federated blockchain.
• It is the blockchain network of two or more two companies.
• It is Private for others but decentralized in its action as all the participants are able to record transactions rather than one central control in Private blockchain.
• Examples: R3 Corda

Fundamentals of Blockchain Technology

Blockchain technology is famous for its building blocks When blockchain technology was introduced in 2007 by Satoshi Nakamoto, it had basic building blocks for its first use case as cryptocurrency, i.e.

1. Decentralization: No control by Central entity.
2. Distributed Ledger: Increase redundancy and decrease ambiguity of the data.
3. Consensus Mechanism: Maximize the participation in decision-making.
4. Immutability: No data manipulation and deletion.
5. Privacy: Increase the privacy by enforcing the hashing and cryptography techniques.
6. Transparent: Accessibility to all makes it transparent.

Smart Contracts were introduced later on by Ethereum to automate its operation and working.

Understanding Differences Between Various Blockchain Protocols

Imagine choosing a car without knowing its features, speed, safety, or purpose. It’s risky, right? The same goes for blockchain projects. Different protocols are like unique car models, each with strengths and weaknesses.

There are various factors that, why we need to understand differences.

1. Smart Investments: Know the tech behind your cryptocurrency or project. Avoid unrealistic promises and identify the right fit for your goals and risk appetite.
2. Tailored Technology: Each protocol shines in different applications. Decide the one that fuels your project’s efficiency, security, and growth.
3. Hype Decoder: Don’t get swept away by flashy claims. Knowing trade-offs lets you spot hidden drawbacks and make informed decisions.
4. Evolutionary Vision: Witness how protocols improve over time, tackling challenges like scalability and security. These insights into the future of blockchain.
5. Objective Comparisons: Compare apples to apples – different protocols’ strengths and weaknesses. Form your own opinions about the best solutions for diverse industries.

Ultimately, understanding protocol differences opens doors to:

1. Smarter Investments: Make informed choices in the evolving world of digital assets.
2. Efficient Technology Adoption: Choose the perfect blockchain engine for your projects.
3. Broader Blockchain Viewpoint: See the transformative potential beyond just cryptocurrencies.

Difference Between Various Types of Blockchain Protocols

	Public		Private
Parameter	Bitcoin	Ethereum	Hyperledger Fabric	Corda
Consensus	Proof of Work (PoW)	currently uses Proof of work but is transitioning to Proof of Stake (PoS)	Practical Byzantine Fault Tolerance (PBFT)	Practical Byzantine Fault Tolerance (PBFT)
Security	High security due to the extensive computational work required for mining	PoW provides security, and PoS is designed to be more energy-efficient.	As it is a Permissioned ; So emphasis on privacy.	Permissioned and focuses on the privacy of transactions.
Transparency	Public and transparent ledger.	Public and transparent	Generally private but can be configured for transparency.	Shared only among relevant parties; supports private transactions.
Throughput/Scalability	Limited transaction throughput (around 7 transactions per second) leading to scalability challenges.	Ethereum 2.0 aims to improve scalability with features like shard chains and PoS.	Suitable for enterprise use with modular architecture and support for private channels.	Designed for high-throughput financial transactions and allows for scaling

Conclusion

In this article we analyzed the characteristics of some prominent blockchain protocols that cover aspects such as consensus mechanisms, security, transparency, throughput & scalability. We covered why blockchain protocol seems to be important for the real world use case.