Advanced Blockchain Networking Protocols: Technical Overview

Protocols are a set of rules that allow data to be shared across the network. They are a set of guidelines that facilitate the exchange of information in a simple, efficient, and secure way. Different machines use different hardware and software but protocols help in communication irrespective of the difference. The protocols play a very important role as they help to monitor and secure a computer network.

Why Does Blockchain Need a Protocol?

A blockchain is a chain of blocks where each block is used to store information and each block is associated with a unique address in terms of hash. It is a distributed, decentralized ledger that stores data such as transactions and is shared publicly across all the nodes that are present in the network. Ledger means the main record which holds the list of transaction records and distributed means that each machine is connected to one another. So there is no involvement of any central authority or middlemen which satisfies the property of decentralization.

But to maintain how data is transferred across the networks in a secured manner, a set of protocols is required. Since blockchains are used for transactions, protocols play a very important role in data sharing so as to maintain the security of the cryptocurrency networks.

What is Blockchain Protocols?

Blockchain protocols are a set of protocols used to govern the blockchain network. The rules define the interface of the network, interaction between the computers, incentives, kind of data, etc. The protocols aim to address the four principles:

  • Security: Protocols maintain the security of the whole crypto network. Since the network involves the transfer of money so protocols define the structure of data and also secure data from the malicious users.
  • Decentralization: Blockchain is a decentralized network. There is no involvement of any central authority. So the protocols authorize the whole network.
  • Consistency: Whenever a transaction occurs, protocols update the whole database at each step so that each user is well versed with the whole crypto network.
  • Scalability: Scalability means an increase in the number of transactions. Earlier scalability was an issue in the blockchain. But nowadays most protocols handle the issue of an increasing number of transactions in the network and the addition of nodes to the network.

Each and every transaction is verified by the developers and is stored so that each individual can have access to the transaction and protocols helps to maintain this transparency.

How Does Blockchain Protocol Work?

Suppose there is a transaction between two individuals A and B.

  • Individual A makes a request to make a transaction. A block for ‘A’ is created. This block once created cannot be altered. This is done by the blockchain protocol.
  • After this, the block is sent to each and everyone in the network. This distribution of blocks across the network is also done by protocols.
  • The nodes verify the transaction.
  • After the verification, a reward is sent to each node. The sending of incentives is also managed by protocol. Upon successful transaction, the block is added to the list. Protocols update the database. The updated database is distributed across the network by the protocols so that each user has access to the summary of the whole network.
  • After this the transaction is complete.
  • So there is the involvement of protocols at each step for a secured transaction. Therefore the whole crypto network is secured, scalable and consistent.

Why is blockchain protocol important to crypto?

Blockchain protocols serve as the backbone of cryptocurrency. Cryptocurrency is an encrypted string of data that has some monetary value.

  • Protocols are crucial components that facilitate the transfer of data in a secured manner. In the blockchain, there is no involvement of government, central authority, or middleman. So to govern the whole network a set of rules is required.
  • Protocols help to establish the whole structure so that the digital money is exchanged securely.
  • Blockchain protocols allow users to manage the data. Nowadays many crypto networks allow users to have digital wallets.
  • The services such as transactions and payment for all services are handled by protocols.
  • Many protocols allow individuals to make financial transactions without the involvement of banks.
  • They also allow for preventing double-spending.

Blockchains are evolving day by day and the protocols are also evolving at a rapid rate. Every sector, including supply chain, health, finance, etc, is using a protocol-based blockchain solution.

Main Types of Blockchain Protocols

Below are some of the types of blockchain protocols:

1. Hyperledger: Hyperledger is an open-source framework that is developed by Linux. It helps the enterprises to provide blockchain solutions, and how to create a secured blockchain protocol. It was developed in the year 2015. It enables international business transactions. It supports Python and there are many libraries that help in software development. The main aim is to provide universal guidelines for Blockchain implementation.


  • It provides enhanced services because of the tools and presence of a large number of libraries.
  • It is open-source hence anyone can contribute.
  • It helps in international transactions.


  • There is a lack of use cases as well as skilled programmers.
  • It is not a network fault-tolerant.

2. Quorum: Quorum is another enterprise blockchain protocol that aims to address the problems related to finance. It is open source project associated with Ethereum. It was developed by JP Morgan. It can change how financial enterprises function and implement blockchain. It is open-source and nowadays has become one of the best enterprise blockchain frameworks.


  • It has the ability to solve any financial query
  • It is an open-source framework
  • It provides better performance and provides an enhanced experience of transaction


  • Lack of scalability
  • Lack of security and privacy

3. Corda: Corda is an enterprise protocol. It is handled by the R3 banking consortium. This protocol is useful in the field of banking and financial organizations. It utilizes consensus algorithms to maintain transparency and security. It is also an open-source framework. It allows for the building of interoperable blockchain networks with strict privacy.


  • It provides enhanced security.
  • It is stable and scalable


  • It is not very flexible as only parties involved in the transaction can take part in the decision.

4. Enterprise Ethereum: Ethereum is one of the public blockchain suite protocols. It defines the platform for decentralized applications. It is the blockchain of choice for developers and enterprises, who are creating technology based upon it to change the way many industries operate. However, for private permissioned networks, enterprise Ethereum is used. It is mostly used for privacy, scalability, and improved performance


  • It is an enhanced version of Ethereum and hence supports more privacy.
  • It is scalable.


  • It is volatile and has high transaction fees.
  • It is prone to online hacking.

5. Multichain: Multichain is an open-source and was established for private blockchain networks. It was developed to help profit-making corporations. It allows to set up of a private blockchain network. It is a private company that offers API for Blockchain development. It is a cross-chain router protocol. It allows users to swap tokens between different blockchains using a bridge.


  • It helps to establish private blockchains that can be used by certain organizations.
  • Multichain allows customizing rules for tokens, transaction control, etc.


  • It does not support smart contracts.

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