Difference Between Blockchain and Cryptocurrency

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Introduction

Blockchain and cryptocurrency are closely related to one another and are often confused for one another. However, both are entirely different entities. Cryptocurrency is a decentralized digital currency that gives greater power to the hands of the person dealing in cryptocurrency rather than the centralized authority. Bitcoin is an example of a decentralized cryptocurrency. It is supported by blockchain technology and helps in tracking transactions.

What unites blockchain and cryptocurrency? 

The cryptocurrency was the primary reason for which the blockchains were created. Bitcoin was the cryptocurrency that used blockchains initially. Other cryptocurrencies have also started working with their blockchains and have different distributed ledger architectures. In the present times, there are four significant types of blockchains available. These are - Private blockchains, public blockchains, consortium blockchains, and hybrid blockchains. They all have different specifications and features and are used accordingly. A Peer-to-Peer computer network manages blockchains. It is used for public use, whereas private blockchains are used for conducting businesses of various types. It is more decentralized than the other blockchains.

Fundamental differences between cryptocurrency and blockchains

Cryptocurrency and blockchains have a set of differences between them. Here are some of them that can help you understand them in a better way −

  • Cryptocurrencies are forms of digital money that you can use for various kinds of transactions. They are easy to exchange and transfer. Bitcoin, Litecoin, ether, etc., are some of the most popular and broadly used cryptocurrencies. At the same time, a blockchain can be called a Peer-to-Peer distributed network with specific rules to follow regarding the data and the database used.

  • The tokens or coins are called the units of cryptocurrency. These are used for transactions and also for the exchange of various types. If you are working with cryptocurrency, you are, in a way working with the tokens. Each blockchain has cryptocurrency associated with it and serves as its open ledger. It establishes the relation between the two, helping the tracking and transactions efficiently.

  • Talking about monetary value, all cryptocurrencies have a particular monetary value. It can vary from one type to the other, but having a monetary value is mandatory to pass as cryptocurrency, whereas blockchains don't have a monetary value.

  • The inherent nature of cryptocurrency is that it saves data on decentralized networks. These networks help grant greater authority to the person directly dealing with cryptocurrency.

On the other hand, blockchains are used for storing various kinds of data that may and may not be related to cryptocurrency. Their existence lies beyond that, making them highly functional and helpful in almost every aspect and field.

  • The usage of both cryptocurrency and blockchains is different. You can use cryptocurrency just for transactional purposes as well as for exchanging. At the same time, blockchains are of various types and can be used for more things than one. Cryptocurrency is one field where they are used. Blockchains can be used in government organizations, hospitals, technical areas, etc.

  • Cryptocurrencies are associated with blockchains and can be accessed via mobile wallets. If you have a mobile wallet on your smartphone, you can access cryptocurrencies without difficulty. You can easily use bitcoins if you send or receive bitcoins from anyone.

On the other hand, blockchains are decentralized and are spread all over the world. There is no particular location where you can find all the information stored. So it is consistently applied and makes it safer and secure.

  • Cryptocurrencies are not transparent; talking about the transparency throughout these processes,

Anyone with an anonymous identity can carry out cryptocurrency transactions. At the same time, blockchains are public ledgers and are highly transparent. Therefore, if you are working on them, you must remember that anyone can join the blockchain network and view the information available.

Conclusion

Despite their differences, cryptocurrency and blockchains make a productive work system that helps cryptocurrency users in their transactions and other related things. Cryptocurrency is taking up the market and is being embraced on a large scale for its ease of use and beneficial applications, as it is one of the latest means of transaction and exchange. The blockchains have made the storing of information relatively safer and more accessible. It also ensures the safety of the information and data from tampering.

raja
Updated on 13-Oct-2022 14:50:02

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