The world is changing fast thanks to new technologies like blockchain. Blockchain, which allows secure information recording in a decentralized ledger, has exploded in popularity recently. The global blockchain market is projected to grow from $17.57 billion in 2023 to $469.49 billion by 2030, per Fortune Business Insights.
Author Don Tapscott says, "Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system." The World Economic Forum calls it "a secure, transparent, and tamper-proof way of recording information" with the potential to revolutionize many industries.
With blockchain growing rapidly, it's crucial to understand the top protocols powering real-world applications. We are excited to guide you through today's 10 most important blockchain protocols.
By learning about the foundations of blockchain, you'll be ready to take advantage of this transformative technology as it shapes the future. So, let's dive in!
Best 10 Blockchain Protocols in 2023
1. Bitcoin Proof of Work Protocol
As one of the top blockchain protocols in 2023, Bitcoin pioneered decentralized digital currency through its ingenious proof-of-work system. Bitcoin mining involves nodes competing to solve complex mathematical puzzles that validate blocks of transactions.
By cryptographically linking blocks into a chain and then rewarding miners with new bitcoin, Bitcoin secures its public ledger without any central authority. This decentralized trust and security come from miners working intensely to prove they honestly validated each block.
However, the energy required for Bitcoin's competition-based mining does impact sustainability. Still, Bitcoin remains a top protocol for its foundational role in enabling trustless, peer-to-peer electronic transactions through the blockchain.
2. Ethereum Proof of Stake protocol
Ethereum has become a leading blockchain protocol thanks to its groundbreaking smart contract functionality.
Launched in 2015, Ethereum enables developers to code decentralized applications and autonomous contracts that run precisely as programmed on its public blockchain. This was a game changer in expanding blockchain use cases beyond just payments and finance.
While Ethereum still faces challenges like congestion and sustainability concerns, its ability to provide a decentralized platform for builders has cemented its status as a top blockchain protocol with a thriving community and ecosystem in 2023.
3. Cardano and Ouroboros Proof of Stake
Cardano is an open-source proof-of-stake blockchain platform that was launched in 2017. Designed by researchers through peer-reviewed methods, Cardano aims to provide scalability, interoperability, and sustainability.
The protocol uses layered architecture and two key components - the Cardano Settlement Layer to track value transactions and the Cardano Compute Layer to run smart contracts and decentralized applications.
Cardano's native token, ADA, fuels the network. With a focus on formal verification methods, Ouroboros proof-of-stake consensus, and deliberate long-term development, Cardano has emerged as a leading next-generation blockchain protocol despite its relatively recent mainnet launch.
4. Polkadot and Parachains
Polkadot is a sharded, heterogeneous multichain protocol that provides a foundation for an internet of interconnected blockchains.
Launched in 2020 after its conception in 2016, Polkadot facilitates interoperability and cross-chain transfers between permissioned and public networks via its Relay Chain and parachains. Parachains can have their own tokens and optimize functionality for specific use cases while benefiting from shared security and cross-chain compatibility.
The native DOT token enables governance over this blockchain of the blockchain ecosystem. Polkadot has quickly become a top blockchain protocol with its focus on scalability, customization, ease of building DApps, and shared security.
5. Solana and Proof of History
Solana is an extremely fast, open-source proof-of-history blockchain that builds scalable decentralized solutions.
Launched in 2020, Solana combines innovations like proof-of-history, Tower BFT, Turbine, and Gulf Stream to achieve industry-leading speeds of up to 50,000 transactions per second with 400 millisecond block times. Solana's native token SOL underpins the network operations and staking.
With a strong focus on scalability, proof-of-history sequencing, and rapid growth in adoption, Solana has quickly risen to become one of the most widely used and promising next-generation Layer 1 blockchain protocols.
6. Binance Smart Chain and Proof of Stake
Binance Smart Chain is a parallel blockchain to Binance Chain that enables smart contract functionality and Ethereum-compatible decentralized applications.
Launched in 2020, it employs a proof-of-staked authority consensus model with 21 validators elected by BNB staking. This allows for low transaction fees and fast block times.
The native BNB token incentivizes validator roles and operations. With Ethereum Virtual Machine compatibility, easy on-boarding from the Binance ecosystem, and lower gas fees, Binance Smart Chain has become a popular option for developers building DeFi products, NFT marketplaces, and more on a faster, cheaper alternative to Ethereum.
7. Chainlink (LINK) & Oracle Network
Chainlink is a decentralized blockchain oracle network that enables smart contracts to securely interact with external data, events, and payment methods.
Launched in 2019, Chainlink helps connect on-chain smart contracts with relevant off-chain resources needed to execute outcomes. It utilizes a global decentralized network of node operators who stake LINK tokens to provide validated external data points to blockchains.
By cryptographically signing data and alignments, Chainlink provides tamper-proof, trustworthy connectivity between blockchains and the outside world. This has made Chainlink a critical infrastructure component for DeFi, insurance, gaming, and other applications.
8. Smart Contracts & TRON (TRX)
The TRON blockchain protocol is focused on building a decentralized internet and content-sharing ecosystem.
Originally launching on Ethereum in 2017, TRON migrated to its own mainnet in 2018 with native TRX tokens. TRON supports high throughput smart contracts that enable developers to create decentralized apps for uses like social networking, gaming, and entertainment.
The TRON Virtual Machine executes smart contracts on the network. With a high transaction rate, low fees, and robust developer tools, TRON powers various crypto products and Web 3.0 decentralized applications. Its acquisition of BitTorrent further supports a decentralized internet vision built on blockchain infrastructure.
Hive is a decentralized, community-driven blockchain designed to be a faster and more scalable alternative to Steam.
Originally forked from Steem in 2020, Hive focuses on enabling decentralized social media and content creation platforms. It uses Delegated Proof-of-Stake to achieve consensus, combined with social incentives related to content curation.
The native HIVE token rewards user engagement and participation. With 3-second block times, low fees, and robust infrastructure tailored for social apps, Hive has quickly gained adoption among decentralized social media projects like PeakD and Ecency, looking for faster performance and community-driven governance.
10. Algorand (ALGO) and Proof of stake consensus
Algorand is a blockchain platform designed for scalability and efficiency. It employs a pure proof-of-stake (PoS) consensus mechanism, where users' stake is the basis for block validation, making it energy-efficient and environmentally friendly.
ALGO is the native cryptocurrency of Algorand, used for staking, transaction fees, and participating in network governance. Algorand is known for its fast transaction confirmation times and is suited for financial applications and tokenization of assets.
In the world of blockchain tech in 2023, these top 10 protocols are like the front-runners of progress. Bitcoin is your digital gold, Ethereum lets smart contracts do magic, and Solana is super speedy. They make DeFi and NFTs happen.
These protocols are like tools that change finance, art, and more. They're each good at different things, like being fast, green, or working together. The future will have all of them working together, making amazing things possible and changing how businesses work.
It's just the start, and these protocols are leading us toward a world where blockchain rules and things work differently.
1. Which Protocol Does Blockchain Use?
Blockchains use various protocols, but the most common is the consensus protocol. For example, Bitcoin uses the Proof-of-Work (PoW) protocol, while Ethereum is transitioning to Ethereum 2.0, which will use Proof-of-Stake (PoS).
2. What Are the Four Types of Blockchain Networks?
The four main types of blockchain networks are Public, Private, Consortium, and Hybrid. Public blockchains, like Bitcoin and Ethereum, are open to anyone. Private blockchains are restricted to specific entities. Consortium blockchains are governed by a group of organizations. Hybrid blockchains combine elements of different types.
3. What Are the Layer 2 Protocols Of Blockchain?
Layer 2 protocols are solutions built on top of existing blockchains to improve scalability and efficiency. Examples include the Lightning Network for Bitcoin and the Polygon (formerly Matic) network for Ethereum.
4. What Are Protocols in Crypto and Blockchain?
Protocols in crypto and blockchain refer to rules and algorithms governing how the technology operates. These protocols define consensus mechanisms, transaction validation, and communication between network participants, ensuring the security and functionality of blockchain and cryptocurrency systems.
5. What Are Consensus Mechanisms?
Consensus mechanisms are protocols that enable participants in a blockchain network to agree on the state of the ledger. Common examples include Proof-of-Work (PoW) and Proof-of-Stake (PoS).
6. Which protocol is best for decentralized apps?
Ethereum is favored for decentralized applications (DApps) due to its Ethereum Virtual Machine (EVM), enabling developers to easily create smart contracts and DApps.
7. Which Blockchain Protocol Is Best for Crypto Networks?
Bitcoin remains a top choice for crypto networks, appreciated for its robust PoW security and established network infrastructure.
8. Proof of Work Vs. Proof of Stake
Proof of Work (PoW) relies on computational work and energy consumption for network security. In contrast, Proof of Stake (PoS) validates transactions based on participants staking cryptocurrency, offering a more energy-efficient alternative.
9. What Is the Future Between Proof of History Vs. Proof of Work Vs. Proof of Stake?
The future likely involves a combination of these technologies. Proof of History enhances scalability, PoW provides strong security, and PoS offers energy efficiency. Different projects will continue experimenting with hybrid solutions to optimize blockchain performance and sustainability.