The definition of protocol is: a system of rules that allow two or more entities of a communications system to transmit information. Therefore, a protocol determines the rules for an operation or transaction. In information technology, a protocol allows several counterparts to communicate with each other (generally through the Internet) with the use of their computers.

Protocols in computing

A protocol is an essential layer of code that allows several clients to communicate with each other. Therefore, it is a program that forms the basis of the software of any given network. Think of the protocol as a set of rules that allow entities to communicate and transmit information. Protocols are not specific to cryptocurrencies; they exist in many different types of systems.

Internet protocols allow websites to work. The most common Internet protocols are HTTP and HTTPS, although you can also find TCP / IP and SMTP. These protocols are the necessary code that allows all Internet applications to run. Facebook, Amazon, Twitter, Google, Netflix, banking sites, news sites – almost all the places you use run on one or several of these Internet protocols.

Like everything on the Internet, cryptocurrencies have their own protocols. It is important to mention that every cryptocurrency (Bitcoin, Ethereum, XRP) has a different protocol. Communication is not the only purpose of cryptocurrency protocols; they are also responsible of safekeeping your privacy and unique address so nobody can take crypto money from you.


Any transaction you perform on the Internet, regardless of the currency an system you use, uses protocols. Regular bank transactions use the communication protocols commonly found on the web. In the case of bank transactions, each institution has internal protocols to determine the validity of each one of them; but these internal protocols are not public. On the other hand, with the use of blockchain, Bitcoin and other cryptocurrencies ensure that the rules of the game are public and anyone can inspect them.

A protocol is sort of the backbone of a network – in the case of cryptocurrencies, the backbone of the Blockchain network. Despite this, you do not need to fully understand the workings of protocols in order to use a network, but knowing that they exist and the functions they perform might help you understand cryptocurrencies better and give you peace of mind when using them.