Cryptocurrency is like a bubble that brings attention and investment and breeds real innovation. However, it’s also touted as one of the most divisive topics of the business.
But, what’s the confusion?
While the blockchain is developed from the chain of blocks, the cryptocurrency is like a part of the cryptographic currency. However, the difference between them is based on how the ledger technology is used among the two.
If you want to dive deep into these technologies, read on below:
If you think that blockchain is nothing but the peer-to-peer distributed ledger of databases, then you perhaps have incomplete information.
Blockchain is more than that!
A blockchain is a decentralized ledger of transactions where participants can verify their operations without any central clearing authority. The blockchain along with its collectibles is secure and decentralized. It’s more like a logical entity that is maintained by a blockchain node. The database in these nodes is mostly read-only which eventually grows when a new block is added. The block payloads are then accepted by the nodes and are distributed to the peers.
Further, the blockchain system is quite robust, as all nodes can accept new blocks and they don’t have to be accessible all the time. However, the challenge for this technique is to maintain scalability and performance of the blocks.
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Cryptocurrency is a digital asset, which is also known as a medium to trade and exchange.
Today, the blockchain technology is used to implement cryptocurrency, making transactions decentralized and distributed. Thus, cryptocurrency is also defined as the medium of exchange, which is created and stored electronically in the blockchain. This transaction uses encryption techniques to control the cash flow and to keep an eye on the transfer of funds.
Further, bitcoin is a type of cryptocurrency that works on the encryption technique; however, it doesn’t have legal support from any bank.
Unlike blockchain, cryptocurrency uses tokens that depend on the ledger technologies. This further means, that anything related to buying, selling, investing, trading or financial aspects deals with the subtoken or blockchain native token.
Why using blockchain, why not a simple database?
The blockchain is secure and decentralized. However, the database is centralized and is not that much secure. Have a look at the benefits of decentralizing:
- The records are immune:
Having decentralized data on the blockchain will make it virtually impossible for the hacker to tamper the records. However, with the database, you can easily edit the file before sending to someone else, which is insecure.
Since you will be having the same set of data which is distributed to all participants, you don’t have to worry if you lose your copy. However, in the database, if you miss your copy, you will not be able to recover the data. Having secure and safe records also offer peace of mind from server downtimes, data corruption and other things.
- Blockchain offer cost reduction:
Having an encrypted set of nodes to maintain the ledger allows the companies to offload and offset hosting, thereby minimizing the costs and offering high security.
- Complete security:
Ideally, all servers and data are centralized, making it easy for spammers to target the nodes. However, blockchain is decentralized and have single or limited servers making it difficult for hackers to tamper the records. Higher the number of participants, higher will be the nodes. Therefore, the hackers will have to attack each node on the network to tamper the data.
Further, every block of the chain consists of some data, and when that particular block gets filled, the data in the block get encrypted and sealed. This further means, blockchain not only make data tamper-proof but also make difficult for the hackers to breach the data.
Some Popular Blockchain And Cryptocurrencies
- Bitcoin: It’s one of the most popular cryptocurrencies in the market. It is also known as the first decentralized digital payment network without any centralized bank. You can use bitcoin to merchandise anywhere with ease. Also, it is popular among small businesses as its transactions require no credit card fees.
- Ethereum: Unlike bitcoin that aims to disrupt online banking and other p2p networks, ethereum aims of using blockchain to replace internet parties that store data and transfer mortgages. Using ethereum, servers and clouds are replaced by thousands of nodes that are run by different people across the globe.
- Litecoin: Just like bitcoin, it is also a peer-to-peer cryptocurrency which works on different algorithms and has modified GUI. In this creation and transfer of coins are done by using an open source cryptographic protocol.
- Ripple: It is also a decentralized payment network used for scalable and quick payment transactions across different global payment systems.
Is investing in crypto and blockchain too volatile for you? Think over, this technology could be the next killer technology!