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Understanding Protocol Wars and What They Mean for Blockchain
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Understanding Protocol Wars and What They Mean for Blockchain

If you’re old enough, you probably recall the formative years of the internet, and the competition between different browsers that ensued. Remember how the first version of Microsoft’s Internet Explorer attacked and decimated the much-beloved Netscape Navigator? Both constituted different protocols, or—to put it simply—ways of accessing the web.

At this point in the development of blockchain, we’re seeing the creation of many different protocols, and we’re probably going to be entering a period of protocol wars. Companies involved in protocol development already exist, and there are going to be hundreds more.

Any peer-to-peer network depends on protocols, which represent a shared behavior or social context codified in the network’s technology. On the individual level, these protocols are implemented through smart contracts between or among all parties to a blockchain-enabled transaction.

The web runs on protocols such as HTTP and TCP/IP, which most of us never think about, but which are the foundation of the entire system. They permit me to receive, read, and respond to an email you send me. They permit me to write on my blog, log onto my favorite social network, stream my favorite movies and TV shows, play my favorite games, order my favorite foods, and access information on your website through my web browser.

More importantly, HTTP and TCP/IP allow my dad to send my brothers and me those dancing-elf video cards—you know, the ones with cut-out faces on elf bodies dancing around to a song.

At this point, the protocols that support the web are relatively well-defined. The protocols that will shape widespread blockchain adoption, however, are still up for grabs. Early in the development of blockchain and cryptocurrency—in this case, “early” means 2016, and we sure as hell know that ain’t early, but bear with me—Joel Monegro at Union Square Ventures proposed the concept of a “fat protocol,” as a response to a critique of Ethereum, the second-most-prominent cryptocurrency system after bitcoin. The argument was that the web we know and love was founded on “thin protocols” like HTTP—a single protocol that serves as the basis for a wide variety of applications. The system’s value was generated and stored in these applications, particularly in the data generated, captured, and stored by such web giants as Google and Facebook.

In contrast, it’s possible for each and every blockchain to be built on its own “fat protocol.” This means that, in this proposed scenario, there will be no, or only limited, interoperability among different blockchains. Each will be built on its own protocol meant for the exclusive use of the very few applications it enables. The blockchain’s protocol, rather than its applications, generates and stores value

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