Cryptocurrencies and blockchain are two words that are frequently used interchangeably. But they are two completely different concepts.
Cryptocurrencies are digital money that exist exclusively in the digital realm. Unlike traditional currencies, these digital assets are not backed by any central government or bank. Instead, they are decentralised and managed by a network of computers running a distributed ledger system, known as the blockchain. Blockchains, however, offer a wide range of applications outside of cryptocurrencies, including the storage and access of financial records, supply chain and logistical data, and medical data.
Blockchain, an elaboration
Similar to a spreadsheet, the blockchain technology resembles to a group of records or documents, having created an online database. However, in comparison, the spreadsheet is quite smaller, since the blockchain possesses multiple blocks where each contains a large amount of data.
A “distributed ledger” or the network governed by a number of users, helps provide access to these blocks through the chain. As each block exceeds it limits, another storage block is chained to the subsequent full block.
Cryptocurrency: What is it?
Similar to the traditional mode of exchange, a cryptocurrency enables an electronic exchange through digital currency. They also have a potential value within the market of commerce. The first cryptocurrency created or recognised was the Bitcoin, formed over the blockchain technology. Afterwards, many other cryptocurrencies were also created using unique blockchains such as Ether.
Blockchain and Cryptocurrency; Essential Differences
In decentralised networks, the blockchain technology serves as a medium of data storage. The cryptocurrency acts a medium of exchange or trade, similar to how the US dollar works. The blockchain technology, however, can be beyond just cryptocurrency, to store data in a number of industries.
Monetary value is attached to each cryptocurrency being exchanged or purchased. Bitcoin has previously reached a high of around 69,000 USD. In comparison, however, blockchain is just a technology and not worth any real money.
Blockchain technology has potential and significant uses in other industries besides that of cryptocurrency catering retail, health care and even supply chain. Cryptocurrency, on the other hand, can only be used as a medium of exchange to purchase either a significant amount of virtual wealth or products and services.
Since the blockchain technology uses a decentralized network, its access is not solely limited to a certain place or geographical region. Moreover, each record is also duplicated over other chains within the network. Despite being stored on blockchains, cryptocurrency may be accessed using mobile or laptop wallets.
As the blockchain is a platform that comprises of a distributed ledger which is accessed by all, it offers a great level of transparency. Anyone that signs up on the exclusive permissioned network can access the data in real time. Cryptocurrencies, in comparison are traded anonymously.