When the term blockchain is mentioned, it’s almost always cryptocurrency that comes to mind. It is common to believe the two words are interchangeable and that they are synonyms. However, this could not be further from reality. The cryptocurrency is a form of money that uses blockchain technology to function.
This guide will explain the basics of blockchain technology and what cryptocurrency can do to it.
What is a Blockchain?
The debut of Bitcoin was the first time blockchain was introduced. The first cryptocurrency to be introduced was Bitcoin. From then on, there were myths that blockchain and cryptocurrency are one and the same.
Blockchain is a decentralized ledger which keeps records of transactions and cannot be altered. Once a transaction is approved and added to a block it becomes permanent. It will now be permanent in the blockchain. Blockchain technology is unique because it is completely distributed. This means that there is no central authority to manage it. It belongs to consumers.
Blocks are used to save the data. Each block is composed of a set number of transactions. Once a block has been completed, it is approved by the network and added to the blockchain. This makes it permanent.
What is Cryptocurrency?
Two words make up cryptocurrency: currency and crypto. Crypto is encrypted or written in code. The meaning of currency is money. A cryptocurrency is a digital asset with a similar value to money. Blockchain technology is used to facilitate easy exchange. Blockchain technology records all crypto transactions.
Bitcoin was the first cryptocurrency ever created. It has since become synonymous with blockchain. Since then, many cryptocurrencies have been introduced to the market.
How Blockchain and Cryptocurrencies complement each other?
Blockchain and cryptocurrencies work together to create a decentralized, secure and digital chain of transactions. There is no office or warehouse in which the servers are stored, nor any other location where operations are performed. Below are some similarities:
Blockchain and cryptocurrency are both advanced technologies that remain a curiosity to many. Many are annoyed that there isn’t an authority to oversee the blockchain and cryptocurrencies. The advent of cryptocurrencies is a new technology that was not intuitive at the time. Many people were skeptical about how they could conduct transactions with a form of money that wasn’t physically available. They are now widely accepted.
Both the blockchain as well as cryptocurrencies are immaterial. The entire data cannot be accessed from any one server or computer. Blockchain ownership is not possible because it is a distributed ledger. Because cryptocurrency is not a fiat currency, it’s the same. It is not physically possible to touch or hold.
Bitcoin was made possible by blockchain technology. You could also say that Bitcoin wouldn’t have been possible without blockchain technology. Blockchain is therefore the foundation of cryptocurrency. Both technologies are interdependent.
Blockchain Applications Other Than Cryptocurrency
Although Cryptocurrencies are heavily dependent on blockchain, the reach of blockchain is far greater than cryptocurrencies. You can use it in many innovative ways such as.
To Facilitate Transfer and Exchange
Blockchain is the future of financial services. Although the financial sector’s goal is to facilitate easy transfers, exchanges and payments, traditional banking methods can be slow and tedious. Blockchain transactions, however, are faster, more secure, and easier than traditional banking. They eliminate the need to use intermediaries such as banks and allow users to transact directly with one another. It increases transparency and security because all transactions are recorded and irreversible.
Blockchain technology is distributed, so hackers cannot target any one point. Blockchains are the most secure storage option because all data is distributed. It is also possible to trace any unauthorized changes.
Smart contracts are transparent, safe, and self-executing thanks to the latest blockchain technology. Smart contracts store the terms of an agreement and execute when both parties comply with them. They can be used for many purposes and can reduce business costs.
Because of their uniqueness, NFTs (or Non-fungible tokens) are rapidly gaining popularity. They represent ownership of an asset. They can represent ownership of an asset, which could be anything, from art pieces to digital assets like coins. They are used frequently in the metaverse, and have gained a new identity due to their popularity. They can also be blockchain-based.
Blockchains’ transparency can be used to allow records to be shared across industries, allowing for faster processing. In the case of insurance companies, for example, patients records can be made easily available to them. Insurance companies can also process claims easily because the data stored on the blockchain has been verified.
Elections are often labelled fraudulent and, despite the use of advanced technology, there is still doubt about their authenticity. Blockchain technology can end this. Blockchain technology can eliminate fraud and tampering of voting records. You will get instant results.
Blockchain Technology is the Future of Cryptocurrencies?
Blockchain technology was the basis of Bitcoin, the first cryptocurrency. Although they were very popular together, it has been a matter of debate whether there is a future in cryptocurrency without blockchain technology.
All the new cryptocurrencies began using blockchain technology after Bitcoin. Blockchain and cryptocurrency became synonymous in the eyes and minds of the public. Many cryptocurrencies today are still working on blockchain technology.
However, it does not guarantee that the two technologies will be able to work together in the future. IOTA, one cryptocurrency that isn’t blockchain-based, is an example. It is based on a mathematical concept called “Tangle” and has already generated a lot of buzz. Reason? The owners claim it will outperform Bitcoin and be faster than Bitcoin.
This is just the beginning of a new era in which blockchain and cryptocurrency will transform in ways that are unimaginable. It will have a profound impact on the future.
Blockchain technology and cryptocurrency will be more accepted in the future. These two technologies are not the same and can be used in parallel. This guide covers everything you need about the relationship of the two technologies and their differences.