Blockchain and cryptocurrency; the difference.

 

The easiest way to think about the difference between blockchain and cryptos is the following:

crypto is a digital currency,  while blockchain is the technology that makes the cryptocurrency working.

Even if this is not always the case I will try to get a bit more into details.

A cryptocurrency is a digital currency, that runs independent from central banks or governments, where the network is in charge of ensuring the verification, security and transfer of funds.

The network mentioned above is the blockchain, the blockchain is a network of computers, connected in a peer-to-peer way (therefore distributed) in which a record of data (i.e. transactions, amounts of funds, contracts, etc.) is maintained and verified.

The blockchain is a distributed database, this means you can use it to run whatever use case you prefer, exactly as all softwares, apps or websites have a database to store the activities. You can as well use blockchain to be the database of your social network website for example.

On top of that you might want to create an ecosystem and maybe an economical one, in this case you might want to create a cryptocurrency that runs on your social network, where the user can use that crypto to promote their own posts.

As you can see the two things can be correlated, but it doesn’t have to be always that the case.

Blockchain is a database, or a list of records, consisted of blocks. The blocks are linked to each other (i.e. the database is expanded) using cryptography.

What is specific to blockchain in contrast to other types of databases is that each member in the network has a copy of an entire blockchain database.

When the database needs to be updated, each member of the network has to verify the new block (new piece of information). This eliminates the need for an intermediator when it comes to updating information for two or more parties.

For instance, a bank has to verify the financial transaction between two parties, and update the database of transactions. Blockchain technology does this automatically, without the need for a bank or other institution, and the authenticity of information is undeniable.

Cryptocurrency is a digital currency (a financial asset or a medium of exchange) that runs on a blockchain technology. The control of transactions using cryptocurrencies is absolutely decentralized (without any intermediaries such as government interference) .

The first decentralized cryptocurrency was Bitcoin. Other types of cryptocurrencies are known as altcoins; many of them have additional functionalities. For example, Ethereum allows automated,decentralized agreements between two parties, called smart contracts.

Blockchain is the underlying technology that allows cryptocurrencies to exist. You can have a blockchain without using a cryptocurrency, but in the other way round, you can’t have a cryptocurrency without a blockchain.

Blockchain can add one more layer across existing infrastructures, which, if implemented correctly, can be used to add more checks and safeguards, this is one it’s distinctive nature.

Blockchain is a technology; cryptocurrency is an application of that technology.

Think of blockchain as an small gasoline engine. The same engine can be used to power a lawn mower, a leaf blower, or an emergency electrical generator. In the same way, blockchain can be used to power a
cryptocurrency, a land registry, or a supply chain tracking system.

Blockchain technology is a variation of a traditional database. The benefit of a blockchain over a common database is that it readily shows evidence of tampering as soon as a single data bit is altered.

Because so many scientific theories from bygone eras have turned out to be wrong, we must assume that most of today’s theories will eventually prove incorrect as well.

Simply put in another way; Blockchain is the technology and Cryptocurrency is the asset class.

Understandably, before 1000s of altcoins were created and Bitcoin was the only cryptocurrency to exist –  then people had a difficult time distinguishing between cryptocurrency and blockchain.

Blockchain is distributed ledger technology whereas cryptocurrency is a form of token *based* on this distributed ledger technology. It is essentially a tool on the particular network. Cryptocurrency is a digital currency based on cryptography whereas blockchain is the technology behind it.

Blockchain is an underlying technology to build decentralized networks. Cryptocurrency is an application that can be built on those networks. Typically, cryptocurrencies are used to incentivize people to contribute to the network.

Moreover, blockchain is fundamentally a network technology. It can be used to build many types of networks within an industry or within a company. This type of network allows strangers to reach consensus and builds trust. For example, blockchain networks now are used to facilitate international money transfers between banks.

There is a whole lot to talk about concerning blockchain and cryptocurrency, it’s  usefullnes to modern day transactions, technology and advancement. It has come to build trusted, secured  and immutable transactions void of cost as a result of interferences from intermediaries.

READ MORE:

 

Bithumb Global launches native token for exchange ecosystem.

Crypto OTC traders can now hide their trade from human broker with an Al chatbot working for them

A crypto exchange owner arrested, Bitcoin ATM seized by Aussie ‘E-crime Squad’.

Twitter CEO Jack Dorsey attends Bitcoin meetup in Ghana

Blockchain Technology and the Travel industry

Credits: StefanoCovola, MarkBrinkerhoff, Hristina Nikolovska,bKathryn Schulz, Chris Skordis.

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