Protocol Layer Definition
In the context of cryptocurrencies and blockchain technology, a Protocol Layer constitutes fundamental blockchain technology that forms the basis by which other applications, systems or layers are built.
Protocol Layer Key Points
- Protocol Layers form the foundation of the blockchain infrastructure.
- They consist of a set of rules and procedures that guide interactions and transactions on a blockchain.
- Systems such as Bitcoin and Ethereum function on their own unique Protocol Layers.
- Additional applications, systems or layers built on top of these base Protocol Layers are termed as ‘second layer’ solutions and often provide added functionality to address limitations in the base protocol.
What is a Protocol Layer?
At its core, a Protocol Layer provides the base framework that forms the bedrock of the blockchain infrastructure. This includes rules governing how transactions are performed, recorded, and validated on a blockchain, as well as the procedures that manage consensus achievement among different nodes on the network.
Why do we need a Protocol Layer?
The Protocol Layer is necessary as it forms the foundation upon which all other blockchain functions are based. It defines the rules that govern the blockchain, in addition to controlling its overall operation. Without a functioning protocol layer, users cannot perform transactions or interact with the blockchain.
Who uses Protocol Layers?
A wide range of stakeholders uses Protocol Layers. Developers utilize the protocol to identify rules to build applications that function on the blockchain. Miners use the protocol layer to validate and add transactions to the blockchain. Users and enterprises transacting via the blockchain follow rules outlined by the protocol.
When are Protocol Layers used?
Protocol Layers are used whenever a blockchain is utilized for transactions or interactions. The protocol acts as the guidelines and blueprint for all activities performed on the blockchain, from the initial transaction made by a user to the final validation by a miner.
How does a Protocol Layer work?
Protocol Layers function by setting procedures and rules for the blockchain. They determine how transactions are performed, verified, and added to the blockchain – guiding consensus mechanisms and transaction validations. Protocol Layers also form the foundation on which other ‘second layer’ solutions can be built to address limitations and provide extra functionality.
