Are cryptocurrency and blockchain one and the same thing? They are not, although many people refer to these terms as being synonymous. The truth is that blockchain and cryptocurrency are two entirely different technologies but they are intertwined with one another.
What are the blockchain and cryptocurrency?
The blockchain is essentially a distributed ledger that keeps records of transactions between parties. It is like beads tied to one another to make a necklace. Every bead has to follow the other, and in the blockchain; instead of beads, there are individual blocks of data. Each such block will comprise of many transactions. There are miners in a network who will verify transactions. When they can solve cryptographic puzzles successfully to form a block, they can earn crypto coins in exchange. While the Bitcoin is founded on this blockchain technology at a protocol level, there are several other coins called tokens that apps will built on the blockchain.
Cryptocurrency was the first of applications to be founded on the blockchain technology. In the crypto world, when you help with a blockchain project you get incentivized through rewards or crypto coins. With more and more people using such platforms the coins gain more value and this is greater incentive for the developers to add more features. The coins sparked interest among people since their values were based on market speculations. But because prices are volatile there are big risks involved when you invest in crypto coins.
How is blockchain related to cryptocurrency?
The blockchain is a series of many blocks that are kept in a shared database. Whenever transactions are verified, a new block gets added to the chain and it keeps growing in size. Cryptocurrencies operate through this chain because it is nothing but a decentralized digital currency. Cryptocurrency will use cryptography for enhanced security and it is not issued or regulated by any centralized authority. While Bitcoin may have been the first crypto coin to be launched, there have been many other since. Both technologies are expected to become integral to your future economic systems.
While the blockchain is the technology on which cryptocurrency works, blockchain find uses in other industries as well. Besides the financial sector, blockchain can provide multiple solutions which can turn out to be disruptive technologies for the future. It is not an optional technology where cryptocurrencies are concerned; it is the key founding principle. Today, even non-technical sectors like voting and politics, healthcare, governments, real estate, and education are thinking of using the blockchain to store, encrypt, and verify their data.
Global expenses on blockchain projects are expected to be to the tune of almost $11.7 billion by 2022. With more and more traditional enterprises and blockchain startups using this technology, cryptocurrencies and blockchain are making way for disruptions in many industries. As this technology starts to spread its wings in other sectors, its association with Bitcoins and other cryptocurrencies will take a backseat. According to experts, blockchain is here to stay and could prove to the technology of the future. Cryptocurrencies will exist only as applications running on the blockchain. In the absence of the crypto coins, the platform will not disappear; it will have to be tweaked but it will survive. For instance, if you wish to use a blockchain without crypto coins, you will need to offer economic incentives to the people to make them participate. In the end, blockchains will help to eliminate inefficiencies and cut down transaction costs when many parties engage in transactions with each other.