Blockchain VS Cryptocurrency
The Crypto world is full of new jargon, with blockchain vs cryptocurrency up at the top. Many users consider these two the same, but this is not the case.
Since cryptocurrency is the future of finance, thus understanding the fundamental differences between these two is necessary to comprehend the entire crypto metaverse better. Further, knowing the differences can make you a better investor.
A blockchain is a distributed peer-to-peer database that records data based on strict rules and regulations to get an initial flavor. Blockchains serve as ledgers for cryptocurrencies since transaction data is recorded on them.
Cryptocurrency is digital money; Bitcoin, Ethereum, and Litecoin are a few famous examples of cryptocurrency. Tokens or coins are measuring units of the cryptocurrency.
Both blockchain and cryptocurrency run hand-in-hand; for instance, Bitcoin cryptocurrency runs on Bitcoin blockchain, while Ethereum runs on Ether.
Let us further explore the topic: Blockchain vs Cryptocurrency.
What is Cryptocurrency?
Cryptocurrency is a digital currency that records and verifies transactions on a decentralized system using cryptography.
The most defining feature of cryptocurrencies is that any central authority does not issue them, thus making them immune to government interference. Many experts tip that cryptocurrency is the future of finance.
What is Blockchain?
A blockchain is a distributed ledger or database shared among peer-to-peer network nodes. It electronically stores information in a digital format.
Blockchain is also known as a digital ledger since it records transactions. It stores data in blocks, which then link together via cryptography.
Similarities between Blockchain and Cryptocurrency
Before we move on the blockchain vs cryptocurrency, let us look at the similarities between them.
The first similarity is that both of them are intangible. Cryptocurrencies are intangible tokens that do not have any physical presence.
Similarly, blockchain exists only on computers; you cannot touch them. They store cryptocurrencies in a virtual world scattered across different places rather than just in a single place.
Cryptocurrency and blockchain work side by side and are interdependent and complement each other to complete a transaction.
All major cryptocurrencies have blockchains that are used to record and store transactions. If you buy an NFT with Bitcoin, it is recorded on a Bitcoin blockchain.
Blockchain and cryptocurrencies are both technological advancements. Blockchain is supporting technology behind cryptocurrency.
Unlike any regular database, blockchain is way more secure and hard to break in. Similarly, cryptocurrency is a technologically advanced form of currency than paper-based currencies.
Differences between Blockchain and Cryptocurrency
When we talk about blockchain vs cryptocurrency, we mostly outline their differences. Many users may deem them to be the same thing, but in reality, both are different.
Although they are inseparable, they have some significant differences that distinguish them from each other. Here are a few critical differences between blockchain and cryptocurrency.
- Inherent Nature
Cryptocurrency stores value and are a medium of exchange like any paper currency. On the contrary, blockchain is a storage technology. You can even use blockchain for storing any data other than cryptocurrency.
Thus, both suffer big time in their nature; one store value while the other store data. You use crypto to buy something, while blockchain will store the history of that purchase. Therefore, they are different from the work they perform.
Cryptocurrencies are anonymous, while blockchains are public.
Since blockchain is a public ledger, thus is highly transparent. That means any authorized person can view transaction details available on a blockchain.
On the flip side, cryptocurrencies offer anonymity. As these are virtually present in a digital world, thus cannot reach the person who owns them. So, you can view the transaction but not the person behind that transaction.
Despite being usually associated with the crypto world, blockchain is equally usable in other technologies. You can use blockchains to store data for supply chains, retail, healthcare, or traditional banking.
While cryptocurrency is a virtual currency with which you can buy products and services or make an investment, both differ in their usage.
You must have heard of Bitcoin hitting a record high of $65,000 or Ethereum reaching $4,000 because cryptocurrencies have a monetary value. They become equity, as public companies are issuing shares in cryptocurrency.
However, blockchain does not have any monetary value.
Blockchain technology is distributed all over the world in a decentralized nature. All records of a blockchain never store in a single place but rather at multiple locations globally.
Cryptocurrencies are mobile; you can even store them on your mobile phone. Numerous digital wallets like a Bitcoin coin used for holding your Bitcoins. Similarly, a col wallet can help keep your cryptocurrency in a USB-like device in your bedroom’s drawer.
Frequently Asked Questions
Are blockchain and cryptocurrency the same things?
Blockchain and cryptocurrency are not the same things; although they work together, they are different technologies.
Does blockchain need cryptocurrency?
Blockchain does not need cryptocurrency; it is a mode of storing records of transactions made through cryptocurrency. So, blockchain does not need cryptocurrency as a critical ingredient.
What are the top 5 blockchains?
The following are the top five most prominent blockchains:
- Coinbase Global Inc (COIN)
- Canaan Inc. (CAN)
- Galaxy Digital Holdings Ltd (BRPHF)
- Riot Blockchain Inc. (RIOT)
- Silvergate Capital Corp. (SI)
What is the best blockchain ETF?
The largest blockchain ETF is the Amplify Transformational Data Sharing ETF BLOK, which has $368.19M in assets.
Is Bitcoin a cryptocurrency or a blockchain?
Bitcoin is a cryptocurrency and not a blockchain; transactions made with Bitcoin are stored in a blockchain.
With digital transformation over the past decades, the traditional financial system is also rocked by the surfacing of cryptocurrency. Since it is a relatively new concept, many people need clarification on both ideas.
The article covers a detailed blockchain vs cryptocurrency match-up. Both of these are modern technological advancements, which run together but differ at the same time.
Blockchain is a digitally decentralized public ledger that records transactions made with cryptocurrency. In comparison, cryptocurrency is a digital currency that stores value usable for buying products or services.
There are multiple blockchains and cryptocurrencies. The most vollatile cryptocurrencies have their blockchains, while smaller cryptos borrow space from these significant cryptocurrencies.
We hope you now totally differentiate between both concepts and fully understand how cryptocurrency and blockchain work. Please leave your views in the comments section.