May 16th 2022
The terms Blockchain and Crypto currency are used interchangeable by many investors or developers. In fact they are not.
Never the less, the two terms belong together, as the Blockchain needs Crypto currency (at least currently) and crypto currency can not exist out side the realm of the Blockchain technology.
So what is what now?
A blockchain is a decentralized and digitized ledger technology that records all complete transactions in chronological order. It is designed and build on a mathematical structure that stores data in a way that is impossible to change, counterfeit or hack. Blockchain technology allows all participants to track application or cryptocurrency transactions without the need for central recordkeeping. In current blockchain technologies, the computers connected to the network also known as a node, receive a downloadable copy of the entire blockchain and every update once a trade is complete.
The blockchain was originally developed as an accounting method for the virtual currency Bitcoin. Today, the same technology is used for many more possibilities. Transaction tracking of applications, digital contracts, rights management for digital assets and many more. This technology can create permanent records, which can’t be altered, which enables authenticity that can be verified by an entire community rather than a single centralized authority.
All records of transactions are stored in a block. This Block is part of the blockchain. Once a block is complete, the block is stored in the chain through cryptography. Once a block completes its job a new one is generated. Each block is traceable as it contains a hash of the former block. These blocks once recorded can’t be deleted, copied or altered; they can only be distributed.
All this makes the blockchain a technology with many possibilities, specially in applications where you want or need to keep permanent records which can not be changed.
The term cryptocurrency is a combination of the words cryptography and currency. Cryptography, a term used form the ancient Greek, means hidden or secret writing. A currency is defined as a standardization of money in any form when in use or circulation as a medium of exchange, for example banknotes and coins. Cryptocurrency is a virtual and digital currency formed through cryptography. Its intangible aspect only avails the currency online. Cryptocurrencies differ from other currencies, they are not issued by a government but acquired through software and/or computer programs (algorithms).
It’s value is not determined by market forces like other currencies such as dollars and euros. However, speculation also plays a crucial role in the valuation of the cryptocurrencies. Depending on the underlaying technology of the blockchain and the definition of the cryptocurrency itself, coins or tokens of a cryptocurrency can be acquired through a process called mining, can be earned within its application or can be bought at a official exchange (if listed) .
In general we can say Cryptocurrency is one (yes an important one) application on a much more powerful technology, the blockchain.
//jrm//