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How to choose a blockchain protocol for development?

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Blockchain has become mainstream by powering cryptocurrencies. NFTs and decentralized applications. With blockchain applications receiving mass adoption across multiple industries, the blockchain market is expected to grow up to 68 billion USD by the end of 2026.

The expansion of the blockchain industry has triggered the emergence of multiple blockchain protocols. Currently, there are 50 plus layer 1 protocols and over 100 plus private permission blockchains to choose from. Everyone blockchain embodies distinct features or capabilities and claims to resolve some of the otherworldly problems; if one protocol can tackle the issue of interoperability, the other can handle speed while another is offering scalability. So which blockchain protocol is the right choice? As a start-up or enterprise, how should you choose the right Blockchain for developing your enterprise application?

This insight will get all the questions answered shading light into how to choose a blockchain protocol for development.

Blockchain protocols can be divided into three different categories

The public protocols

A public protocol is available for anybody to download and launch a node to join the network. Like Ethereum, Bitcoin, and Stellar and there are many public protocols.

Private blockchains or private protocols

These chains are called private because they do not allow everyone to participate, and only entities approved by the network itself can join.

Hybrid protocols

These protocols are gaining popularity as enterprise-grade blockchain platforms because they offer the best of both private and public chains. When you build your application on a hybrid protocol, you can use both public and private chains. While some information can be stored on a private chain, consensus on another set of information can be achieved on a public chain. That is why it is referred to as a hybrid protocol.

As the application of Blockchain gets more mainstream, we will see more maturity in the protocols. For instance, the introduction of a protocol like Flow. Flow showed up because of the NFTs. It is a complete- NFT-dedicated protocol. Then there is XDC Network, a hybrid blockchain dedicated to transforming the Global Trade and Finance space with sustainable blockchain products. Then there’s Hyperledger, yet another area-specific protocol. So many protocols are graduating now; it is a continuous exercise.

Although there are numerous use cases of blockchain protocols, three major use cases that have transformed various world dynamins are Defi, followed by the NFT, and finally by the Metaverse. There will be a lot more protocol maturity focusing on these three categories as time goes on. We will see the introduction of new protocols and the development of ecosystems for existing protocols to strengthen the development of Defi, NFT, and Metaverse.

How to choose a Blockchain protocol based on the use case

Protocol maturity and the emergence of new protocols lead to the crossroad where picking up a protocol or understanding the right choice gets tricky. One way to choose the right Blockchain for development is to understand what kind of application you want to develop.. Understanding blockchain applications can provide insights into the protocol intricacies.

1. Decentralized Finance

Defi or decentralized finance is an alternative ecosystem of financial services that replaces the role of central intermediaries prevailing in the existing traditional financial setups. Within the framework of Defi, the financial transactions or deals are not controlled by central entities rather regulated by smart contracts. So instead of relying on any central authorities or entities, basically smart contracts are written to define the business logic of the financial processes and then deploy them on top of the Blockchain. Defi Smart contracts can replace central financial intermediaries in exchanges, brokerage houses, loan systems, and banks.

Just like depositing your money into banks provides you with some sort of incentives in the form of interests, you get to earn incentives even in Defi. In a Defi system, your stake in your crypto assets and earn returns for participating in the system through staking.

From the development perspective, Defi applications require a lot more speed and executive power in the underlying blockchain protocol. For instance, consider a Defi lending app; it will require an immediate correction of amounts and transactions, so for such an application, the TPS or speed of the Blockchain make a difference. But not all defi applications need high speed. For instance, a defi application for staking may not require very real-time recording of transactions, as transactions can be scheduled to run every hour, every day, or whichever way it is required. So what characteristics are needed in the layer-1 blockchain protocol depends upon the type of application that is being factored in.

Another type of Defi application that is currently popular as blockchain use-cases are exchanges. Increasingly people use exchanges to participate in cryptocurrency trading. Exchanges are of two types: In centralized exchanges, a central entity is involved, and it does all the market making. Then there are decentralized exchanges powered by Blockchain. These exchanges are not controlled by one entity, and smart contracts take care of all the transaction processing.

2. Decentralized Storage

Decentralized storage is another big use case. Decentralized storage is built on layer one or two or layer three, depending on the type of the application. Cost optimization in terms of space and time is important when it comes to building decentralized storage because there is the complexity involved in storing something on the blockchain network, retrieving it, and then executing business logic on top of it.

There are a couple of different types of applications within decentralized storage. One is IPFS which is a layer-1 application kind of application. Then applications like FileCoin or Store are layer two applications built on top of IPFS, thus adding more features to IPFS.

3. Value Chain

A value chain is a very interesting use case of Blockchain from an enterprise perspective. In a business setup, wherein there are multiple entities involved, blockchain-based value chains allow all those business entities to participate in a trustless manner. They can participate in the consensus via their nodes.

One example of a blockchain-based value chain could be the end-to-end medical aid distribution network. Multiple entities get involved here, for instance, the procurement entities who take care of transferring aids from one country to another country. All these entities in the value chain network can participate in the blockchain consensus mechanism to ensure complete transparency, traceability, value exchange, and smooth flow of the cross-organizational processes. Value chain systems are typically built on permission Blockchain than on absolute private or public chains.

4. NFTs

Another major use-case of Blockchain that came out recently is Non-fungible token. NFTs are created to tokenize digital assets like digital arts, music, in-game assets, videos and photographs, gifs, and even tweets. As an immutable proof of ownership for digital assets, NFTs have found mass adoption, and there are a lot of consumers to it.

In the case of NFTs, the blockchain protocol is needed to build the NFT marketplaces, where NFTs are bought and sold. The protocol itself doesn’t have a huge role to play because, in the case of NFTs, it is all about storing the digital asset in the right place so that it can be viewed and validated. It is more of record-keeping and ensuring that the right business logic gets triggered whenever the exchange happens, or the value changes hands. That kind of application requires smart contracts compatibility and storage facility. Unfortunately, many of the protocols don’t have storage off the shelf, which is a debug.

Another major problem with NFTs that needs a solution is around the validation of that asset. A user buying an NFT from one blockchain protocol always wants to make sure that his NFT is scarce and not available anywhere else. So fraud prevention or validation is one problem that needs to be stalled.

The crux of the context is that a record-keeping application, whether it is NFT transaction records, legal records, health records, or educational records, has a different requirement that revolves around private or permissioned blocks where records are being updated all the time. Then they are being synchronized with third-party sources, and then the application is built on top of that data that is there on the decentralized network.

5. Blockchain for legacy systems

There are a lot of applications out there that are centralized applications. Also, there’s a lot of data stored on centralized databases or centralized storage. So how Blockchain can be introduced to those legacy systems.

In this particular type of use case, any important data from legacy systems that need validation are pushed to the Blockchain and stored on it. One of the key technical requirements in such use cases is the synchronization of offline or on-chain and off-chain data. So, here the requirement is of a quality protocol that can handle a lot of on-chain and off-chain data synchronization.

6. Metaverse

As many of us know, Metaverse is a digital world, where users have their digital avatars and maybe digital language. The concept of Metaverse is not new; it has existed in gaming platforms like Minecraft and Roblox. So, basically, Metaverse is a digital world where people chat, interact, and exchange value. But now, Metaverse is expanding beyond games and finding relevance into our other digital experiences, meant not just for entertainment but also work, networking, traveling, and a lot more.

Metaverse and adoption of beta version gaming will be a huge application for Blockchain. Already marketplaces are being created to buy digital assets for virtual worlds.

Facebook announcement and naming themselves as Meta is another story as it talks about one centralized Metaverse. However, if we talk about Metaverse as a blockchain use-case, then we cannot say that there will be just one Metaverse. There will be many; there will be multi-verses (multiple digital spaces) converging and facilitating interoperability from one world to another. So, for Metaverse development, the underlying protocol requires to be strong in terms of interoperability.

What factors to consider while choosing blockchain protocol for the development?

1. Speed

Speed has been considered and hyped on a lot whenever new protocols are being launched in the last few years; however, speed is not the only thing that matters. The relevance of the protocol’s speed depends on the type of application that is being developed. Let’s say if somebody is browsing NFTs, so here speed makes a difference. The user takes time choosing between various NFTs or digital assets, so they have to browse and make a choice. So, this needs to happen at a great speed. But for the transaction of buying one NFT, speed hardly makes any difference.

So depending upon the use case, the choice of protocol to be made. If you factor in speed, then speed should be your application requirement. You must wisely comprehend how much speed really impacts your application. If you are blindly going with one particular blockchain protocol for its higher speed factor, you could lose other features that your application requires.

2. Bridging

Users want more freedom and flexibility in moving their assets and money from one protocol; to another, so bridging is very important. When you are creating a blockchain application, any types of applications mentioned in the insight, it is essential to consider what kind of bridging support or compatibility your blockchain protocol can provide? Can it bridge your application to other applications?

There are bridging-focused protocols, like Polygon and Polkadot. These protocols have the concepts of side chains or Para chains to support the development of applications that can effectively bridge with other multiple protocols. Considering bridging at the onset of the development process, gives you the flexibility in the future to move your application from one protocol to another depending upon how protocol matures.

For instance, you create a stable coin on Ethereum but eventually want to move to the XDC network. Bridging ensures that you will be able to move your tokens and assets from one platform to another, which basically means going out from one community and reaching out to a new community. It’s a major shift in terms of ecosystem tools, SDKs, APIs, and all.

3. Energy efficiency

The energy efficiency of blockchain protocol is being widely discussed but not taken into much consideration. Companies, start-ups, or large companies may be aware of the importance of this factor, but when they try to build something new on a decentralized network or Blockchain, then the energy efficiency of a protocol is probably even not in their agenda unless the app is specifically meant for energy efficiency.

But energy has a huge impact on the environment, and for the Blockchain to be a sustainable technology in the future, it is definitely important to consider energy-efficient blockchains. Bitcoin adopts a proof of work consensus mechanism that requires a lot of mining, and it takes a huge amount of power consumption on various nodes. But then, other protocols like Hedera support proof of stake consensus algorithm and are very energy efficient. So, energy is one factor to consider while choosing a blockchain protocol.

4. Cost

Cost is certainly very important. The cost can be divided into two bars; one is execution cost, another is the cost of storage. How much of the application’s component needs to be executed on the network or how much data you are storing on-chain determines the cost. These factors have a huge impact on the cost because when you are working with smart contracts and saving data or executing smart contracts, money needs to be burned.


Before choosing a protocol for the development, go deeper and try to understand what the protocol has to offer, its technology and various aspects, how traceable it is, its security quotient from attacks, its compliance, and its token economy.

If you are looking for blockchain protocol consultancy and development assistance, please reach out to our blockchain experts. They will help you better understand the protocols and pick the right one for your application development.

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Author’s Bio

Akash Takyar
Akash Takyar
CEO LeewayHertz
Akash Takyar is the founder and CEO at LeewayHertz. The experience of building over 100+ platforms for startups and enterprises allows Akash to rapidly architect and design solutions that are scalable and beautiful.
Akash's ability to build enterprise-grade technology solutions has attracted over 30 Fortune 500 companies, including Siemens, 3M, P&G and Hershey’s. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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