Blockchain technology has reached a milestone where it is popular across all industries. Every enterprise is looking for ways to benefit from its decentralized nature and features that process transactions securely and privately. With blockchain being used in every industry, it is necessary to keep up with the evolution of blockchain and its protocols. Blockchain protocols are regulations and guidelines followed to achieve its decentralized and distributed nature, to ensure secure transactions, and more.
All these terms might be overwhelming for someone new to the blockchain biz. This blog will serve as your trusted guide, offering a gist of protocols in blockchain and their benefits, common terminologies used in the enterprise blockchain protocols, and the different top enterprise blockchain protocols and their key features.
What Is a Blockchain Protocol?
A protocol is a set of procedures that governs the functioning of something and how it is transferred among devices. A protocol is a block of code that is the fundamental basis of networking and security. It forms a framework that specifies the rules on data transfer and reflects how the devices react to the information transmitted.
Blockchain protocols, also known as enterprise blockchain protocols, govern different parts of blockchain technology. In the blockchain, protocols maintain the decentralized approach, eliminating the central authority nature by spreading in the entire network. Protocols ensure that the data transferred across the network is efficient, secured, and reliable. A blockchain protocol’s responsibility is to maintain and control security, consensus, and the networking aspects of the blockchain.
Enterprise Blockchain Protocol Terminologies:
Some of the most commonly used terminologies in the Blockchain industry are as follows:
1. Consensus Algorithm
It is one of the most important and frequently used terms in the blockchain field. A consensus algorithm determines who is responsible for validating the records’ blocks and how other participants can authenticate them. The algorithm ensures a standard agreement among the participants regarding the state of a distributed ledger.
2. Distributed Ledger
A distributed ledger technology (DLT) is an infrastructure that allows participants to communicate through the network to reach a consensus. A distributed ledger, also known as a shared ledger, replicates, shares, and synchronizes data digitally and shares it across the network in various sites.
3. Smart Contracts
A smart contract is an agreement between two parties stored on a blockchain. It is a set of code that executes automatically when the predetermined conditions are met. A smart contract is stored on the public database; it cannot be moved or changed.
4. 51% Attack
A 51% attack occurs on the Proof-of-Work (PoW) algorithm when miners or groups of miners try to hoard more than 50% of the network’s mining or computing power. The control of such mining power can lead to blocking new transactions from being placed or getting confirmed. The PoW algorithm is responsible for validating transactions and avoiding the double spending of cryptocurrencies.
Top 5 Enterprise Blockchain Protocols
These five blockchain protocols have emerged to be the top choices among enterprises in various industries:
Hyperledger is an open-source enterprise project and acts as an umbrella for frameworks, guidelines and standards, and tools to build blockchains and blockchain-based enterprise applications. The libraries included in the Hyperledger protocol aims to develop and deploy blockchain solutions fast and efficiently. It provides industry-wide association and a framework that can be used across many industries to enhance a transactions’ performance and speed.
It is hosted by the Linux Foundation, and thus works effectively on servers across enterprises. It includes member organizations that are leaders in finance, IoT, supply chains, etc. The sub-projects operating under Hyperledger are Hyperledger Fabric, Sawtooth, Composer, Burrow, Explorer, and Cello.
Key Features of Hyperledger:
- Efficient performance
- Permissioned membership
- Supports plug-in components
It is another open-source blockchain project that is specifically designed for businesses. It is used to build blockchain platforms that can solve complex enterprise-related problems. It helps cut down record-keeping costs and provides development services such as Corda App Consulting, User Interfaces, Regulated Tokens, etc. Corda allows businesses to transact directly with the help of its smart contract technology. Therefore, it can create interoperable blockchain networks to complete the transactions in a secured infrastructure, ensuring transparency, traceability, and validation.
The R3 banking consortium develops Corda, and most of the applications developed through it have been implemented or deployed in the finance and banking industry.
Key Features of Corda:
- Multilayer Ledger
- Point-to-Point Architecture
- Pluggable Consensus
Ethereum is also an open-source platform that builds and deploys decentralized applications, helping users create agreements or carry out transactions without a third party involved. It is widely used to send and receive values across the globe. It is also a programming language that helps developers in building distributed applications. Ethereum ensures that the smart contracts and decentralized applications do not face any downtime or interference from a third party.
Ethereum has applications other than payments; it is a marketplace for financial services, games, and applications that cannot expurgate or steal your data. Ethereum has created a cryptocurrency known as Ether, which is based on the same technology as Bitcoin. It is used to pay transaction fees and computational service fees. Miners can mine Ether after the validation of the transaction is processed on the Ethereum platform.
Key Features of Ethereum:
- Peer-to-Peer Network
- Data Coordination
- Wide Scalability
Invented by JP Morgan, Quorum is an open-source blockchain protocol beneficial for businesses in the finance sector. A Quorum was built on the Ethereum framework, and it is growing towards becoming the best possible enterprise blockchain protocol. It can be used to develop in-house tools or third-party applications. It was specifically designed to be permissioned, ensuring the transactions are private. It uses a consortium approach, meaning it has to be authorized by a specified entity.
Quorum architecture includes three components — Quorum Node, Constellation – Transaction Manager, and Constellation – Enclave. The architecture maintains a permissioned network with the privacy and enhanced performance.
Key Features of Quorum
- Peer Permission Management
- Contract and Transaction Privacy
- Voting-Based Consensus
- Higher Performance
MultiChain is also an open-source blockchain platform that offers APIs to provide blockchain development services to update integration and complete the deployment speedily. It provides a command-line interface along with the API to preserve and build the chain. It helps enterprises to create private blockchains for carrying out efficient transactions and build blockchain-based applications. It allows for creating multiple key-value and identity databases on a blockchain network for timestamping and data sharing.
MultiChain technology is used by enterprises to conduct financial transactions. It allows the creation and deployment of private blockchains within the enterprise or among two or more enterprises. Before carrying out the transfer of assets on the chain, every node must be configured with MultiChain.
Key Features of Multichain:
- Faster Development
- Unlimited Access to Assets
- Controlled Permissions
- Flexible Security
As blockchain technology is gaining more momentum, blockchain protocols are also evolving every day. Selecting a blockchain protocol before building a blockchain application or tool is very important as it determines the scope of your application and its ranging functionality. The selection of a protocol also depends upon the nature of your enterprise and industry.
These protocols provide you with features and wide applications and thereby leads to faster execution with fewer resources. However, incorporating these protocols is a highly complicated process as they use sophisticated and complex technologies.
If you are a beginner in the field of blockchain or a blockchain enthusiast, you should start with the fundamental concepts of blockchain technology that will provide you with a clear understanding of blockchain technology, its functionality, and applications. Suppose you are interested in pursuing blockchain technology as a career. In that case, join EC-Council’s Certified Blockchain Program (CBP) to learn blockchain from industry leaders and equip industry-level skills to create blockchain-based applications.
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