Blockchain Vs Cryptocurrency | The Detailed & Memorable Guide for All in 2020
Blockchain & Cryptocurrency | An Overview
The terms Blockchain and Cryptocurrency are most definitely not going to be alien ones, for anyone who has been following the banking and investment industry.
The level of popularity of these terms notwithstanding, the world of Blockchain and Cryptocurrency is still one shrouded in mystery in the eyes of the general public.
This essay looks to provide a clearer understanding of these technologies, explaining to you in clear words what the
terms “Blockchain” and “Cryptocurrency” mean, how they work, and what are the futures of these technologies hold in store for us.
But before we get into that, let’s answer one of the most frequently asked questions about these technologies: Is Blockchain and Cryptocurrency the same thing?
Blockchain and Cryptocurrency ─ Is There a Difference?
Most times when discussions occur, it is almost impossible to talk about one of these terms without talking about the other, at the very least, to a degree. This close relation is most likely the reason for the misconception that these two terms are in fact the same thing.
Though this might seem the case, however, it is NOT true. Yes, when Bitcoin, the first Block-chain and Crypto-currency first hit the world, these terms essentially meant the same thing, this is no longer the case in recent times.
With the creation of several new Block-chain and Crypto-currency, we have come to a simple realization: Both are NOT the same. When it comes to knowing what Block-chain and Crypto-currency are, there is one major thing to remember: All Crypto-currency is Block-chain, but not all Block-chain is Crypto-currency.
Now, with that out of the way, let’s get to explaining what Blockchain and Cryptocurrency really are.
What are Blockchain and Cryptocurrency?
The terms Blockchain and Cryptocurrency can be rather complex topics to talk about, especially since there is a lot more to them than a simple definition. Nevertheless, in this section of the blog, we would be attempting to break down these technologies for you and provide you with a more comprehensive explanation.
We begin with arguably the most common of the two ─ Blockchain.
What is Blockchain?
To put it in the very simplest definition possible, a Blockchain is simply a series of blocks arranged and stored in a public database (the chain), with these blocks being digital information.
But what does that even mean to start with? To understand this, we need a better understanding of what the “blocks” in Blockchain really are, and what the relevance of the storage and arrangement in a chain means.
The block in “Block-chain” as earlier stated refers to digital information, but this can actually be misleading.
In reality, these blocks do not represent individual information but can represent large clusters of data about different things and even different people. These records of data (which is what each block essentially is) are then managed by a series of computers under a decentralized and delocalized network (the chain).
So in essence, a Block-chain is a series of data records (the blocks) managed by a series of computers (the chain) under a decentralized or delocalized network.
But what does it even mean for a network or system to be delocalized or decentralized?
Well, basically, both terms mean the same thing. A delocalized (or decentralized) network is one where the several nodes (in this case computer terminals) connected to the network operate independently of any single service point.
In order words, in a delocalized or decentralized network or system, there is no central computer, server, or facility that controls or monitors the entire network. This makes most transactions on such a network virtually untraceable.
This delocalized network is what gives Blockchain the property it is most known for ─ anonymity and privacy.
What is Cryptocurrency?
Cryptocurrency, on the other hand, is a little different.
Let’s take for example this little fact ─ all Men are Humans, but not all Humans are Men.
This same principle applies to Cryptocurrency and Blockchain. As stated earlier, all Cryptocurrency is Blockchain, but not all Blockchain is Cryptocurrency. Having already given a brief explanation of what Blockchain is, let’s now get to the other side of the coin ─ Cryptocurrency.
In the simplest form, Cryptocurrency basically means “Cryptographic Currency”, that is an internet-based medium of exchange that utilizes cryptographic functions to carry out financial transactions.
What this means is that these digital currencies are secured by cryptographic functions and this makes them virtually impossible to forge or double-spend.
These Cryptocurrency or virtual currencies as they are also called quite often are basically digital currencies with real-world value and should not be mistaken for the other virtual currencies spent in games that have no value outside the places platforms that offer them.
Now one might be tempted to ask, what is the correlation between these “digital money” and the Blockchain technology. Well, the answer is simple. Cryptocurrency uses Blockchain technology to achieve de-localization, transparency, and stability.
Thanks to Block-chain, the world now has the opportunity to enjoy the most important feature of Cryptocurrency ─ the lack of any central authority that controls the value of the currency.
With Cryptocurrency utilizing Block-chain technology, these digital currencies benefit from the delocalized nature of Block-chain and are thus immune to being controlled by any singular party, even the government.
Current World View On Blockchain and Cryptocurrency
Since both technologies were brought to the attention of the world in 2009, it is safe to say the world has never been the same since.
First introduced to the world by the mysterious individual (or group of individuals) only known as Satoshi Nakamoto, the earliest introduction the world got to Cryptocurrency and Blockchain technology was the Bitcoin, which still remains the most important Cryptocurrency till date.
Since its inception, Cryptocurrency and Blockchain technology as a whole have revolutionized the way businesses and legal transactions have been carried out all over the world.
While initially this technology was viewed with suspicion in several parts of the world, and even considered illegal in quite a few regions, it has now become widely accepted and is even utilized in various financial institutions and can even be utilized in the legal sector.
Are Cryptocurrencies Legal?
One of the biggest concerns people have about Cryptocurrency and Block-chain technology, in general, is whether or not these technologies would cause legal problems.
Since Cryptocurrency and Blockchain exist outside the jurisdiction of any of the world government, this fear is not unwarranted.
Indeed, in earlier years, Crypto-currency was indeed banned from several regions around the world including various states in the USA.
There were various reasons for this, one of the major ones being the fact that the inventor of the first Crypto-currency ─ Bitcoin ─ was, and still is, essentially a ghost.
Next to nothing is known about the mysterious Satoshi Nakamoto who created the first Blockchain.
Another reason for the distrust that faced Crypto-currency in the earliest years of its development was the special feature Blockchain technology offered ─ de-localization.
The concept of a new type of money that had no physical or material form, had no central institution controlling it and could be transferred from one individual to another simply made people suspicious.
Over the years though, the world has come to warm up to the two technologies and in most regions around the world, Crypto-currency has become a legal means of transaction and has even been known to be formally accepted by several institutions.
This is not to say that Crypto-currency has become accepted everywhere in the world.
For example, while in recent years, the United States has a generally positive reaction to the use of Crypto-currency and Australia considers Bitcoin as a currency like any other.
However, some other countries like China and Bolivia have banned the use of Crypto-currency. In such countries, the use of Cryptocurrency is considered ILLEGAL.
So when next you look to make transactions with Bitcoin, remember to confirm that it is considered legal in the country or region you wish to make your transaction.
The Future of These Technologies
With the world warming up to Cryptocurrencies as the years go by, the future of virtual money looks bright. But the Blockchain technology has a scope far beyond just Cryptocurrencies. From the world of commerce and business to communication and even the legal sector, Blockchain technology shows great promise.
Some of the areas Blockchain technology shows exceptional promise include:
The Legal Industry
Interest in the Blockchain Technology by the Legal industry began growing dramatically in 2017 and as of 2019, the Legal industry had become one of the biggest supporters of Blockchain technology.
It is believed that Blockchain technology can be utilized to solve the following problems in the legal industry
Replication of Documents
Blockchain has solved a problem the legal industry has been trying to solve for years now ─ document replication.
With Blockchain’s ability to prevent “double-spending”, ensuring that no digital unit can simultaneously be used to carry out more than one transaction, the legal industry might finally have the means to ensure that documents used in transactions are nothing but original.
Since data and information stored in a Blockchain is automatically tamper-proof due to the cryptographic hash function of each block in the Blockchain.
This technology might help fix another problem the legal industry has been trying to solve for years ─ the issue of forgery
The Communication Industry
The potential offered by the Blockchain industry has always been rather obvious whenever communications were involved. With the decentralization feature offered by Blockchain, it now becomes truly possible to communicate anonymously.
With the possibility of creating browsers that allow true anonymity, communicate without leaving traces and so on, there is basically a world of opportunities for Blockchain in the world of communications.
Apart from the above-mentioned areas and the commercial sector, the Blockchain technology remains a very promising invention, one that is bound to revolutionalize how we perceive and carry out some things in the nearest future.
Want to know more about Cryptocurrencies and Blockchain technology?
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