Home
Glossario
Crypto Protocol

Crypto Protocol

Intermediate
A crypto protocol is a set of rules and procedures governing participants’ behavior in a decentralized network that uses cryptography to secure its operations. Crypto protocols are usually open-source and transparent, allowing anyone to examine and verify the underlying code. Designed to be decentralized in nature, they ensure that no single entity or authority controls the network. Instead, participants contribute to its operations by validating transactions and maintaining the network’s consensus.
Protocols are not exclusive to cryptocurrencies; they exist almost everywhere. Take the Internet, for example, where protocols enable websites to function. The most common internet protocols are HTTP and HTTPS. These form the underlying code that allows all Internet applications to run. Google, Facebook, Twitter, and many other websites run on one of these internet protocols.
Crypto protocols are designed to be trustless, meaning participants can transact without needing a trusted intermediary. This is made possible through the use of cryptography to secure transactions and ensure their integrity.
To demonstrate, look at Bitcoin, the most prominent crypto protocol. It allows users to transact money directly, without a third party like a bank. Bitcoin’s consensus algorithm is based on Proof of Work (PoW), which requires participants in the network to solve complex mathematical puzzles to validate transactions and earn new bitcoins as a reward. 
Crypto protocols are fundamental in the emerging field of decentralized finance (DeFi), which aims to create new financial systems and products that operate on decentralized networks to rival traditional finance.
Glossario

The Beacon Chain is Ethereum’s proof-of-stake (PoS) layer where consensus is reached. It controls and coord...

Glossario

One of the primary properties of money. Allowing measurement and comparison of the value of different things.

Glossario

An application that is created through the use of modern web technologies and follows basic web standards.

Glossario

Generation of a new cryptocurrency which occurs in a variety of different ways, depending on parameters spe...

Glossario

US-based agency responsible for regulating the derivatives markets, which includes options, swaps, and futu...

Glossario

The time elapsed when a transaction is submitted to the network and the time it is recorded into a confirme...