DEFINITION of 0x protocol
0x is an open protocol for exchanging digital assets decentralized running on the blockchain Ethereum. A protocol is a standard set of rules that can be used by a system or by various parties to the transaction to communicate with each other smoothly. 0x The protocol is essentially a standard messaging format and a suite of intelligent contracts on which the transaction entities can exchange digital assets or chips.
BREAKING DOWN 0x Protocol
To draw a parallel, think about how banks worldwide use the standard SWIFT messaging system to communicate with each other on money transfers. A standard set of defined message fields and their corresponding values are used in the SWIFT system to securely transmit details such as the sender, recipient, amount, currency, branch source and destination branch, between other. Since each bank adapts to the standard rules of the SWIFT messaging system, they are able to deal directly with each other. The situation would go wrong if each bank followed its own separate protocol, because each bank would have to adhere to an individual communication channel with all other banks. Respect for a universally acceptable standard format allows for smoother operations with higher efficiency. (For details, see How does the SWIFT system?)
The protocol 0x tries to function similarly to SWIFT, but to operate decentralized exchange for trade tokens and digital assets that run on the blockchain Ethereum. Built on the basis of Ethereum token standards, the 0x protocol acts as the key infrastructure layer for the growing number of applications and financial instruments that embark on the blockchain technology stack and are marketed in digital forms. As more and more global financial value is symbolized each passing day, the need to negotiate such assets and digital securely and efficiently chips increases. With its clearly defined message formats and intelligent contracts, 0x protocol attempts to fill the need.
The message format 0x protocol is a set of data fields that contain key information such as asset or token exchange, the price value of the transaction, the expiration time and identities defined parts to the transaction. Intelligent contracts support the business logic necessary responsible for generating, sending, receiving and processing data related to trading activity. It also leaves room for necessary upgrades, if any, in the future. The upgrade is necessary due to any changes needed to comply with the amended regulations, or for any changes related to intrinsic functioning blockchain Ethereum network. The system also uses the relays, which act as aggregators of orders and are responsible for disseminating the orders of market players named to the market or exchange.