The phrases blockchain and cryptocurrency are frequently used interchangeably. There is, however, a significant distinction between the two. Cryptocurrencies are digital currencies that use the blockchain as a ledger to keep track of transactions. Beyond cryptocurrencies, blockchains can be used to store and access medical data, supply chain and logistics data, and financial records, among other things.
What Is Blockchain?
A blockchain, like a spreadsheet, is a collection of records or an electronic database. Unlike a conventional spreadsheet, a blockchain stores a vast amount of data, such as cryptocurrency transaction records, in “blocks” or groups.
A “distributed ledger” is created by distributing these blocks over numerous computers. When a block’s storage capacity is reached, it is “chained” to a previously filled block, creating a new block.
What Is Cryptocurrency?
A cryptocurrency is a form of digital money with a market value similar to that of other currencies. Cryptocurrencies, like gold, can be used as a store of value. Bitcoin was the first cryptocurrency, and it was the first to use blockchain technology.
Other cryptocurrencies, such as Ether, have since developed their own blockchains (known as Ethereum). However, these digital currencies are neither issued nor managed by any centralized authority nor cryptographically safeguarded against counterfeiting. Instead, the network’s governance is left to the participants. Tokens and coins are terms used to describe cryptocurrency.
Similarities: Blockchain And Cryptocurrency
Cryptocurrencies and blockchain are both technological developments. Blockchain is the technology that underpins cryptocurrencies. However, traditional databases are far less advanced and secure than blockchain. Likewise, physical or paper-based currencies are technologically inferior to cryptocurrencies.
Cryptocurrencies and blockchain are both intangible. Cryptocurrencies are ethereal digital tokens that cannot be physically held, unlike the US currency or the Indian rupee. Blockchains are used to store cryptocurrencies, do not persist in a single location or a single physical data center.
Blockchain was created to keep track of bitcoin transactions, the world’s first cryptocurrency. Blockchains are used to record transactions in all major cryptocurrencies. For example, when someone purchases a new bitcoin, the transaction is recorded in the bitcoin blockchain.
Differences: Blockchain Vs Cryptocurrency
1. Monetary Value
A monetary value exists for all cryptocurrencies. You have probably heard about Bitcoin reaching a high of $65,000 or Ether reaching a high of $4,000. There is no monetary value attached to a blockchain.
Blockchain technology has applications that aren’t limited to cryptocurrency. For example, in the banking, healthcare, supply chain, and retail industries, blockchain can be used to record transactions. On the other hand, cryptocurrency is a type of digital money that may be used to buy goods and services and to invest.
3. Inherent Nature
Blockchain is a data storage technique that is used on decentralized networks to save data. Cryptocurrency, like the US dollar, is a medium of exchange. Beyond cryptocurrency transaction records, a blockchain can be used to store a variety of data.
Because it is a public ledger, blockchain is highly transparent. Anyone can join a blockchain network and look at the data it contains. Cryptocurrencies, on the other hand, provide anonymity. As a result, while anybody can see the source and destination of a bitcoin transaction, no one can tell who is behind it.
Blockchain technology is decentralized and globally dispersed. There is no single location where all of a blockchain’s records are kept. Cryptocurrencies can be accessible through mobile wallets, even though they are stored in blockchains. If you have a bitcoin wallet, you can use it to conduct business with anyone who accepts bitcoins.
Decentralized platforms that require a coin can be enabled via blockchains. The blockchain is the distributed ledger technology that allows a network to maintain consensus. The network can track transactions and transfer value and information thanks to distributed consensus. Cryptocurrencies are the tokens that are used to convey value and pay for transactions within these networks and offer network incentives. Furthermore, you might think of them as a blockchain tool that can be used to serve as a resource or service or even to digitize asset ownership.