By Eric Kuvykin, Mr. Kuvykin specializes in the areas of payment solutions, alternative lending, sales and marketing, architecture, development, and deployment of various technologies, venture capital, and strategic acquisitions in related technology sectors. Since 2013, Eric Kuvykin became fascinated with cryptocurrencies and blockchain technologies.
Two terms are very often misused interchangeably, Blockchain and Cryptocurrencies.
Here is a simple way to look at this. Think of roads and cars. Cars drive on roads, so do trucks, motorcycles, bicycles, etc. While cars and roads have a connection, each has its own purpose.
There is a huge difference between the two. Blockchains (roads) have a multitude of uses beyond the Crypto world. Blockchain is ideal for storing and accessing personal, business, and medical data, supply chain and financial records, transactional data, and various other forms of stored information. Cryptocurrencies (cars) are digital currencies that use blockchain as a ledger for storing records of crypto transactions.
What is Blockchain?
A blockchain is a database (collection of records) that is shared among nodes (node is a participant in a blockchain network) of a computer network. A blockchain holds large amounts of data in “blocks” or groups, unlike more primitive spreadsheets or other digital databases. Such blocks of information are distributed across multiple computers known as a “distributed ledger.” Once a particular block reaches its storage limit, it is “chained” to a previously filled block, initiating a new block into the chain. The information may pertain to various transactions including cryptocurrency transactions, traditional credit card payments, insurance, banking, medical, financial, and a vast variety of digital records. Blockchain innovation guarantees the fidelity and security of a record of data and generates trust without the necessity for a trusted third party. Blockchain provides the ability to maintain a secure and decentralized record of transactions. Blockchain empowered DeFi, Decentralized Finance.
What is Cryptocurrency?
A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. In simple terms, Cryptocurrency is digital money with market value determined by buyers and sellers, supply and demand, traded on various crypto exchanges. Crypto currencies are extremely volatile when compared to Fiats. Fiat money is a modernday government-issued currency that is not backed by a commodity. In the past, governments backed issued money with commodities such as gold. Fiat money gives central banks greater control over the economy because they can control how much money is printed. Most modern paper currencies, such as the U.S. dollar, are fiat currencies. On April 20, 1933 President Roosevelt issued a proclamation that formally suspended the gold standard
Cryptocurrencies can also be used as a store of value like gold. The first cryptocurrency was Bitcoin for which code was written in blocks, hence it pioneered blockchain technology. Since hundreds of crypto coins have come to life. Subsequently, other cryptocurrencies, such as Ether, came up with their own versions of blockchains (known as Ethereum).
Since Bitcoin’s launch in 2009, new types of cryptocurrency began to emerge. Competitors adopted the various flavors of blockchain technology to launch their own platforms and currencies.
Today there are thousands of different types of cryptocurrencies. Each crypto is designed to provide some reimagined new feature or function, most are founded on similar principles to those that established bitcoin. As of September 2021, nearly 10,000 tradable different types of cryptocurrency exist with a market capitalization of nearly $2 trillion. Equally as important, understanding the difference between Crypto Coins vs. Tokens
Similarities Between Blockchain and Cryptocurrency
Intangible
Blockchain and cryptocurrencies are intangible. Cryptocurrencies are intangible digital tokens. Unlike the U.S. dollar or the Japanese Yen, you cannot physically hold the coins or notes. Blockchains used for storing cryptocurrencies are distributed through a multitude of computers and networks and do not exist in a single place or one physical data center.
Advanced
Technological advancements provide means for more advanced and secure means of transacting than traditional databases.. Blockchain is the underlying technology behind cryptocurrencies. Blockchain is much more secure and advanced when compared to traditional physical or paper-based currencies.
Interdependent
In 2008 when Satoshi Nakamoto,( whose true identity is still unknown) released the whitepaper Bitcoin: A Peer to Peer Electronic Cash System that described a “purely peer-to-peer version of electronic cash”, blockchain technology made its public debut. Today, Blockchain, the technology that runs Bitcoin, has evolved with the potential to impact every industry. All major cryptocurrencies have blockchains for recording transactions. If someone mines or buys a new bitcoin, it is recorded in a bitcoin blockchain.
Monetary Value
All Cryptocurrencies have a monetary value established by buyers and sellers willing to buy or sell at desired price utilizing crypto exchanges. Similar to publicly traded companies, shares, and the various brokerage firms exchanges through which you may acquire or sell shares. While Bitcoin traded as high as $67,000, blockchain technology does a liquid or exchanged quoted monetary value. Instead, various developers modified protocols and purposes, such Valuations would be determined in a similar fashion to a software company.
Usage
Blockchain can be used for securely recording a variety of transactions in most if not all industries. Cryptocurrency is a digital currency and can be used in trading, investing, and for buying goods and services.
Mobility
Blockchain technology is decentralized and records are distributed globally. Cryptocurrencies, held in blockchains, are accessed via mobile wallets. If you have a digital wallet, similar to credit cards, you can transact with parties accepting bitcoins.
By Eric kuvykin
erickuvykin.com
https://fintechacquisitions.com
https://twitter.com/EricKuvykin
Come back regularly, We will cover additional topics :
Crypto Coins vs. Tokens
Decentralized Finance (DeFi)
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