With the development of blockchain technology, a number of new decentralised platforms have now appeared with unique features. As a result, it is challenging to examine the options and choose which best suits the company’s needs. Investigating, analysing, and comparing a number of potential blockchain protocols is necessary before selecting one. The examination of the components that each blockchain platform offers requires a simultaneous comparison of the platforms. With Bitcoin, blockchain technology was first put into use. A simple spread ledger technique called blockchain was used to power Bitcoin and record all transactions.
Bitcoin was a public chain; however, with a period, Blockchain protocols developed, and currently, there are four fundamental types of blockchain protocols:
- Public blockchains
- Hybrid blockchains
- Private blockchains
- Consortium blockchains
With its many variations, blockchain technology acts as a secure data vault for digital data. It is based on distributed, decentralised, and autonomous computer networks that run and are sustained by consensus procedures. Transactions are secured with the aid of consensus procedures on a blockchain network. For instance, the horizontal Proof-of-History keeps track of every step of the transaction process, preventing any possibility of fraud on the network.
What’s a blockchain protocol?
The blockchain’s structure is built using a protocol. Fundamentally, this is a base layer of code that creates the framework for blockchain activity.
This is not limited to cryptocurrencies but can be used for it. One example of a cryptocurrency is Bitcoin. The Bitcoin Protocol is used to exchange bitcoins. The sharing of digital purchases can be governed through protocols.
The proof-of-work system used by the Ethereum and Bitcoin Protocols has an impact on mining. This suggests that data is dispersed (yet secure) and that several systems must cooperate to thwart harmful attacks.
Some protocols work differently. Hyperledger Fabric, for one, does not use proof-of- stake or proof-of-work. It is not a protocol developed for cryptocurrency. It is, however, fully permissioned. This indicates that companies can have power over the blockchain network. A full permission approach is not feasible in Bitcoin or Ethereum.
Why Does Blockchain Require a Protocol?
Blockchain’s decentralised nature is the basic tenet of the technology. This implies that there is a lack of centralised control.
- Protocols are applied to make it function as intended. Peers or nodes must be linked and maintain a copy of the ledger because there is no centralised commodity. The network also employs a consensus technique to verify transactions into blocks.
- Once constructed, these blocks cannot be altered. The protocols are used for all of this. It serves as a general rule. This implies that there are additional blockchain sorts that attempt to operate differently and rely on the money they hope to make from their endeavours.
- One cryptocurrency that seeks to improve decentralised purchase exchange is Bitcoin. It has now, however, evolved into more of an asset used to hold value, much like gold.
- In recent years, blockchain has also grown rapidly. From what bitcoin initially produced, a lot has changed. There are committed individuals, groups, and organisations working to transform blockchain with a better option that may be used in a variety of situations.
What are the different kinds of blockchains?
With companies and start-ups increasingly integrating blockchain into their organization’s strategies, the decentralized technology has been categorized into four major classes based on its use points:
- Public Blockchain:
- Open-source blockchain networks include public blockchains. They provide everyone permission to participate in the network as miners, users, designers, and network members.
- Public blockchains allow for equal and unrestricted involvement from all members. The processing of transactions on the public blockchain is entirely legal and open to all participants in the network for the purpose of dissecting its components.
- A public blockchain is totally decentralised, with no single, overriding authority. It is very censorship-resistant since anyone can join the network at any time, regardless of location or nationality. As a result, public blockchains cannot ever be turned off.
- Private Blockchain:
- Blockchains with permissions are private blockchains. To join these blockchains, individuals need approval. Only network actors who have permission to operate on the private blockchain can conduct private transactions on those blockchains.
- These blockchains are crucial for businesses that cooperate and share data, but many are reluctant to commit their sensitive corporate data to processes on a public blockchain.
- As the network’s multiple companies drive the chain, maintaining similar authority over diverse members and the systems of governance, a private blockchain is significantly less centralised.
- Hybrid Blockchain:
- A hybrid blockchain has an ecosystem that incorporates elements from both a private blockchain network and a public blockchain network. This explained how the hybrid blockchain combines the openness of the public blockchain with the privacy and security of the private blockchain.
- As a result, a hybrid blockchain enables a business process’ flexibility by giving users the privacy and choice to make any information publicly available as they see fit.
- The patented interchain property makes the hybrid environment possible. The chain can connect to other blockchain protocols thanks to this component. The development of a multi-chain network is simple to do when a hybrid mechanism is used.
- They make use of the integrated hash power being used for the public chains to operate multiple public blockchains simultaneously to increase the secrecy of the transactions.
- Consortium Blockchain:
- Federated blockchains are another name for consortium blockchains. Instead of starting from scratch, they let every additional participant to join the existing structure and share data.
- Organizations may easily acquire answers to guarantee their time and development costs by using consortium blockchains. The consortium blockchain has a variety of advantages, including the certainty, security, economic viability, control, flexibility, and energy needed for mining.
- The consortium blockchain is used in sectors like logistics, banking and finance, healthcare, and insurance.
What are the fundamentals of blockchain technology?
The various fundamental features of decentralized blockchain technology are as follows:
- Consensus Mechanism: Simply said, consensus ensures that the data being preserved in the ledger on-chain is accurate and unaltered. To check the veracity of data and the malicious behaviour of any validator or miner on-chain, there are a number of consensus mechanisms available, including Proof-of-Work (PoW), Proof-of-Stake (PoS), Proof-of-History (PoH), voting-based consensus, leader-based consensus, economy-based consensus, Proof-of-Authority (PoA), and Virtual Voting consensus.
- Block Time: Block time describes how long it takes to create a new block on a blockchain platform. With a blockchain, transactions are broadcast quickly, but they are not trusted until they are connected to the subsequent block in the chain. To ensure that transactions are validated quickly and that network nodes do not have to wait a lengthy time to confirm them, a low block time is therefore always necessary.
- Transaction rate per second: The amount of transactions calculated for each block on the blockchain is called TPS, or transaction per second. A greater TPS implies a healthy blockchain network bandwidth.
- Scalability: In the context of blockchain, scalability refers to a network’s capacity to accommodate a higher volume of transactions. Blockchain scalability refers to the ecosystem’s ability to handle an increase in the volume of transactions and data while reducing latency and bootstrapping time.
- Immutability: Forming an immutable ledger is one of a blockchain platform’s key features. As centralised databases depend on third parties to keep them secure, it is easy to hack and tamper with them. The distributed ledger of the blockchain, however, makes it difficult to change any data once it has been written and preserved on-chain. The blockchain allows exclusive auditing when needed because it is immutable by nature.
- Gas Fee: The amount users pay to the miners for their transactions to be included on the blocks is known on the blockchain as gas fees or transaction fees. A demand and supply mechanism is the foundation of the gas tax system. The miners will choose to include the transactions that are paying more gas fees relative to the others if throughput is high and there is a high demand for the transactions. High throughput forces the gas cost to rise in accordance with the demand-supply dynamic, forcing users on-chain to pay more for expedited transaction processing.
- Auditability: As the distributed blockchain technology is immutable in nature and is resistant to any sort of tampering of the database, it is held accountable for true and verified data of the processed transactions.
- Trust and security: In the blockchain, we operate directly in a decentralised manner without the need for middlemen. In exchange for establishing confidence between several parties, intermediaries receive payment. Blockchain gets rid of the administrator or central authority by dispersing data across the network. In order to establish trust in blockchain, all network nodes approve the transaction using consensus methods.
- Transparency: Blockchain offers a high level of security and transparency since it informs all parties engaged in the transaction of every element of the transaction. The specifics of the transactions carried out on the blockchain network will be readily available to every user of the platform.
Parallel comparison of different blockchain networks
Blockchain technology has undergone years of development and is currently divided into several generations. Every blockchain age has a level-up consensus mechanism that solves the issues that the previous blockchain generation was unable to solve.
- For instance, third generation blockchains are better able to address the scalability issue than second and first generation blockchains.
- Furthermore lacking were smart contracts in the early days of blockchain technology. Similar to this, other factors like TPS and interoperability are more beneficial in the third blockchain age.
- This is why we need to compare various blockchain platforms in a tabular and detailed manner in order to understand their features and the growth of P2P networks and properly incorporate them in our interactions.
|TPS||13.20 TPS||2000+ TPS||250+ TPS||166.6 TPS||1954 TPS||15000 TPS||1420 TPS||1500 TPS||4500 TPS|
|Smart Contracts||Yes (EVM)||Yes||Yes (KEVM)||Parachai ns (EVM, Wasm)||Yes (Solana BPF)||Yes||Yes (JS, CosmWa sm, EVM)||No||Yes (C-Chain EVM base d)|
|Scalability||No||Yes (Shar ding)||No||Parachains||Yes (Horizon tal PoH)||Yes||Unlimited zones (Horizontal and vertical)||No (Only by chann els)||Yes (Unlimited subnets, shards like)|
|On-Chain Governance||No||Yes||No||Yes||No (Only for programs)||Yes||Yes||Yes||No|
|Level of Decentralization||High||High||High||High||Low||High||High||Medium||Medium|
|Human Readable Address||Yes||Yes||No||No||No||Yes||Yes||No||No|
|Gas Fee||$ 10||Near to zero||Near to zero||Near to zero||Near to zero||Near to zero||Near to zero||Near to zero||Near to zero|
|Digital Identity Management||Yes||Yes||No||No||No||Yes||Yes||No||No|
|Deposit Time||5 min||Near to instant||Near to instant||2 Min||Near to instant||Near to instant||Near to instant||Near to instant||1 min|
|Decentralized Exchange||Yes||Yes||Yes||Yes||Yes||Yes||Yes||Yes(In code base)||Yes|
|Consensus Mechanism||Proof-of- Work||Delegated Proof-of- Stake||Proof-of- Stake||Proof-of- Stake||Proof- of-Stake based on Byzantine Fault Tolerant (BFT)||Proof- of- Stake based on federated voting||Proof-of- Stake based on Byzantine Fault Tolerant (BFT)||Ripple Protocol Consensus Algorithm (RPCA)||Delegated Proof-of- Stake based on Directed Acyclic Graph|
|Chain Generation||2nd Gen||3rd Gen||3rd Gen||3rd Gen||2nd Gen||3rd Gen||3rd Gen||1st Gen||2nd Gen|
|Block Time||14 secs||2 secs||20 secs||6 secs||0.8 secs||3-5 secs||7 secs||4 secs||3 secs|
The comparison chart above is based on a few key factors that will guide your research and help you select the best platform for your organization’s needs. The comparison of blockchain protocols reveals that their growth over time with new upgrades and consensus mechanisms is their most important characteristic. For instance, the third generation of protocols adopted a more appropriate consensus mechanism for the second generation of blockchains. In the case of Polkadot, they used park chains and horizontal proof-of-work to solve the scalability issues. Thus, a parallel investigation of protocols can never come to an end and will develop over time for a deeper understanding of the immutable blockchain technology.