Blockchain and cryptocurrency are the latest trends of 2021. Without a doubt, individuals around us seem a tad bit more interested in this topic than usual. If you are someone who wants to know more about blockchain and cryptocurrency, here is a small article that will take you through the basics of these two terms. So, sit back, relax and just continue reading further.
Let us start with the basic definitions of these terms. If we talk about blockchain, this technology enables the entire existence of the current cryptocurrency. On the other hand, a cryptocurrency can be referred to as a medium of exchange just like a US Dollar. A cryptocurrency is digital and utilizes encryption techniques. This helps in controlling the creation of cryptocurrency, its monetary units and also helps in carrying out secured transactions.
What Do You Mean By Blockchain Technology?
This type of Technology enables the transaction of Bitcoin or any other type of cryptocurrency. A blockchain can easily be defined as a decentralized ledger of transactions. This entire information is stored on computers connected online across a peer-to-peer network. A blockchain eliminates the requirement of a central authority.
As per the current scenarios, blockchain can easily be considered as the next-generation business process. This technology also offers potential applications that are far beyond the usual Bitcoin or cryptocurrency. This collaborative technology inshorts individuals with the ability to improve the business process.
What exactly is Cryptocurrency?
A blockchain cryptocurrency has been designed as a digital asset. It works as a simple and digital medium of exchange that guarantees secured transactions. Cryptocurrencies completely function on digital channels that guarantee secured transactions. Blockchain cryptocurrencies can be of various types. For instance, one of the most prominent cryptocurrencies is bitcoin. You might have also heard about Litecoin, Ripple, Ether, and so forth.
Cryptocurrency is unique as no individual can duplicate this medium of transaction. Moreover, cryptocurrencies can easily be transferred from one person to another. The most unique part about cryptocurrency is that it does not require any type of third party or an organization or even a computer server that serves as a trusted source.
How Do Cryptocurrencies Function?
One important thing to note about cryptocurrency is that, unlike the physical currency, this does not follow a decentralized system.
They do not follow the systematic plan for controlling the day-to-day transactions as we observe in centralized digital currencies or the normal Central banking system. Cryptocurrencies are rather based on a distributed ledger technology. In this case scenario, a blockchain basically serves as a financial transaction database for public use.
Blockchain and Cryptocurrency: Are They Same?
A simple answer to this question is no, blockchain and cryptocurrency are not the same things. Over the years, these two terms have been used simultaneously. But, blockchain and cryptocurrency are quite different from each other. While blockchain is the master ledger of a cryptocurrency and generally records all the transactions as well as activities, a cryptocurrency is just a medium of transaction talking about blockchain. It consists of an entire record of a cryptocurrency. It has a finite length that contains a certain number of transactions. Furthermore, identical copies of a blockchain are stored in a cryptocurrency software network. This decentralized network of server farms is usually managed by the tech-freaks of our generation. We refer to these tech-savvy individuals as miners.
If you have been observing the investing sector for about a few years now, you must have come across the term blockchain or cryptocurrency. These two terms are gaining significant popularity as they are now considered a profitable way of investing. This medium of transaction eliminates the centralized network of authorities. In the above-mentioned article, we have briefly summarised the basic difference between cryptocurrency and blockchain. We trust that this article will be quite beneficial and help you understand this concept more easily.