Today, lots of people still think that Blockchain & Bitcoin are one and the same, and one cannot blame anyone who belongs to this school of thought. Manyat times the two terms are used synonymously but there indeed lie very clear differences between the two terminologies.
WHAT IS BLOCKCHAIN?
A blockchain can be said to be a form of “ledger technology.” It is said to form a “chain of blocks” and each of these blocks include information and data that are put together and are verified. The blockchain is an inalterable data record as these blocks(linked records) are validated and concatenated onto the chain of transactions and information in previous blocks. The blockchain eradicates all the needs for intermediaries(banks, government, etc) to aid the exchange. So very simply, blockchains can be said to be digital accounting systems in which verified transactions between users are securely and permanently recorded.
Blockchains are the technology that make the distribution of decentralized data possible and whenever a new transaction or an old one moves, blockchain publicly records the details of the transaction and it depends on a large network of computers which verifies each other’s data.
WHAT IS CRYPTOCURRENCY?
Cryptocurrency is a digital currency formed by the art of solving or writing codes. Quite simply, cryptocurrencies can be seen as a tool on a blockchain network. They can also be seen as tokens that are used to send value and pay for transactions. So cryptocurrencies are virtual currencies that are built on blockchains. Cryptocurrencies have evolved over time and can now serve for various purposes on blockchain networks. One very valid example would be Ethereum. The underlying technology is known as Ethereum whereas the token is Ether and transactions are paid for in gas. So although all “tokens” can be referred to as cryptocurrencies, these tokens can also serve different purposes.
Distinctions Between Cryptocurrency and Blockchain:
Blockchains serve as the platform which brings cryptocurrencies like bitcoin into play
Blockchains serve as the base technology for cryptocurrency transactions
Blockchains act as the distributed ledger that keep records of virtual transactions
In the case of a cryptocurrency like bitcoin, it cannot be printed and a s a ground rule, there can only be 21million bitcoin in circulation this helps to prevent any possible case of inflation. And as of now, there are already about 15.5million in circulation.
Cryptocurrency is decentralized and is not solely controlled by any institution
Blockchain is a distributed ledger that allows for peer-to-peer transactions.
The value of cryptocurrency can be determined by the market via the forces supply and demand. This kind of fluctuations in value does not necessarily have impact on the blockchain.
Cryptocurrencies for example bitcoin have decreased the transaction charges of across border transactions and they have increased the speed of cross border transactions
Its very important to make mention of the fact that Blockchain’s scope and potentials go far beyond the world of cryptocurrency. Although, blockchain was initially created for Btc(cryptocurrency), Blockchain provides a more secured and transparent way of processing all kinds of data and therefore, the diverse applications and uses of this technology are endless. This ingenious blockchain technology has neatly carved a niche for itself. It has created a new kind of online platform and can be applied to record keeping, and can be used as a financial instrument and we are yet to scratch the surface of this technology.
Unlike the cryptocurrency, the blockchain is not so volatile. Cryptocurrency in itself is quite volatile and even the bitcoin has its own security issues but there are much more smarter versions of cryptocurrency today. Its just like a case of old gadgets being slow and sloppy but newly invented gadgets are a lot smarter and faster. So with the passage of time more versatile forms of cryptocurrency will be invented. Cryptocurrency can be used for selling, buying, investing, microtipping, trading and so on but as already proven; there would be no cryptocurrency without Blockchains.
So if I were to give a very simple summary of the two terminologies, I would say that the terms: Blockchain and cryptocurrency are very related and they at some point or the other rely on the other for relevance. Nonetheless, Blockchains are the network frames on which cryptocurrencies gain relevance. Blockchains keep permanent account of the crypto transactions and serve as a quicker means for making cross-border transactions without intermediaries. Cryptocurrencies are subject to a large degree of changeas they depend on the market’s for their value but the blockchain doesn’t suffer this fate.