You might be coming across the terms Blockchain and Cryptocurrency, very frequently nowadays. With the maturing of technology, the emergence of these two revolutionary ideas came up. In the present day, the concepts of Blockchain and Cryptocurrency find implementation at a wider scale.
Blockchain and Cryptocurrency are pretty much interlinked for the fact that Cryptocurrency itself is a type of blockchain. However, you must wonder then what is the difference between the two. So, you are at the correct place where you shall familiarize yourself with these two terms.
What are Blockchains?
In simple terms, blockchains refer to the immutable, time-stamped records of a series of multiple data handled by a number of computer systems. And No specific individual can own it in general. One can also define it as a decentralized ledger. The blocks of data are kept secured and linked, thus resembling a chain.
It is transparent and everyone can view it openly since it is not owned by a single group or individual and has no central authority. Everyone taking any action over the blockchain remains accountable for his or her actions.
A blockchain keeps records of transactions made. As being immutable, the data remains stored permanently and no one can change it under any circumstance.
What do you Mean by Cryptocurrency?
Cryptocurrency refers to an internet-based exchange medium, that makes use of cryptographical functions to lead the way for financial transactions. Now, it is interesting to know that Cryptocurrency is basically a kind of blockchain implementation. It is the first application implementing blockchain technology.
So all the main blockchain characters are applicable to Cryptocurrency. Thus it is free from being controlled by any central authority. This decentralized nature makes cryptocurrency immune to government interference. Blockchain and Cryptocurrency both are immutable and thus resist any changes in the transaction records.
It is an advantage of Cryptocurrency that it can be exchanged between parties by the use of keys, public or private. Thus, it allows transfers at a very mere processing fee. One can regard cryptocurrency as cryptographically created digital currency operating in the same principle as the blockchain.
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Properties of Blockchain
Blockchain has a three-pillared technology structure. The three properties that make blockchain invincible are immutability, decentralization, and transparency.
Talking about immutability, blockchain has been designed in such a way that it resists any changes brought in its internal database that hold the transaction records. Once you enter something within the blockchain records, no one can tamper any further.
This is, of course, a boon for many organizations as it protects against stealing and fraud. It gives you a reliable platform for carrying out transactions.
So how does blockchain manage to inculcate this immutable property? The answer is via cryptographic hash functions. This generates fixed-length outputs for variable input lengths. Hash functions are very sensitive, and even a small change in the input can alter the complete output string.
The decentralization of blockchain gives it more flexibility than any central system can ever have. Centralized systems have data stored in a single spot, thus making it prone to attacks by hackers.
This can result in the compromise of all the data as the entire system will come to a halt. Moreover, an owner can dictate a centralized system thus leaving very little say to users in certain situations.
Of course, transparency does not need much explanation as already mentioned before. It allows an open platform, and you can view data records anytime. Though in the context of individual privacy, it keeps the identity of a real person secure.
However, you will still be able to perceive all the transactions done by them using their public address. This amount of transparency, within a financial system, adds the much-desired level of accountability which is compulsory for some of these biggest organizations.
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Properties of Cryptocurrency
We already know that Cryptocurrency uses the blockchain concept., so let’s skip the common properties and see the features that only Cryptocurrency possesses.
Cryptocurrency does not involve the use of real identities when connecting accounts and transactions. Transactions are received in the name of the so-called addresses that are basically random chains of about 30 characters.
Cryptocurrency involves no gatekeeper. So, no one can prevent you while carrying out transactions. It is free software and after downloading, you can freely use it without having to take permission from a third person.
A harsh truth, but once you send money, you can in no way reverse it back. Once a transaction is done, it’s done. This is something that puts a bit of risk while carrying out cryptocurrency transactions.
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Key Differences Between Blockchain and Cryptocurrency
Earlier it was considered that Blockchain and Cryptocurrency are interchangeable terms. But that is not true. Blockchain is the technology and Cryptocurrency is the application. Many such differences do exist that are discussed below.
Nature: Blockchain is a technology that keeps a record of transactions made using digital currencies. Whereas Cryptocurrency resembles a virtual digital currency used for making transactions within a block.
Monetary Values: Cryptocurrency being a digital currency has monetary value and is regarded as the wealth of the owner. But blockchain has no such monetary significance.
Mobility: Blockchains are basically blocks containing transaction records, so they do not find use as a means of transaction. Cryptocurrency, on the other hand, is like currency notes and you can transfer it from one party to another. This confers mobility to Cryptocurrency.
Usage: Cryptocurrencies, with monetary value, are used for payments, investments, and even forbidding. Blockchains find uses in storing the details of such transactions in a safe way.
After going through the above article, you can get a brief idea of how these two technologies are interlinked but still have differences among them. Of course, the use of Blockchain and Cryptocurrency is increasing exponentially over time due to the amount of flexibility and security rendered to users. And this is what makes these new concepts, invincible in the market.