While some people might believe that the blockchain and cryptocurrency are the same thing, that’s not really the case. The two notions pertain to the same industry, but they are very different, which is why we are here to clear up some of the confusion. Even if they might seem rather similar based on their scope, the blockchain and cryptocurrencies serve different purposes, although they are interconnected.
What are cryptocurrencies?
Cryptocurrencies are virtual currencies that you can store and use only in the online world. They aren’t hard currencies like USD or EUR for example, but they do exist and can be transacted online. They can even be used to buy and sell products. However, due to the fact that they are not regulated and rely a lot on anonymity, they aren’t kept in check by governments and that makes their value extremely volatile.
What is the blockchain?
The blockchain is a chain of blocks, with each block keeping a cryptocurrency transaction. So yes, cryptocurrencies exist on the blockchain, but they are not the same thing as the blockchain. However, the blockchain can’t exist without cryptocurrencies, so both of these are interconnected, and they work seamlessly to allow users the option to transact online without real-life currencies.
One thing to note about the blockchain is that it can be used for a vast range of other things other than keeping cryptocurrency transactions. For starters, it can be used for asset management, smart appliances, supply chain sensors, it can also store healthcare data and music, personal information, not to mention it can be used for claims processing. It’s a versatile, professional solution that helps push the experience to the next level in a very rewarding manner.
Key summary of differences
Bitcoin and Ethereum are cryptocurrencies, and they can be used for a variety of transactions in the online world. However, the blockchain is just a distributed database that stores and manages the cryptocurrency transactions. And while cryptocurrencies are powered by the blockchain, the truth is that the blockchain itself has many other powerful uses that expand well beyond crypto transactions.
Then there’s also the different meaning and purpose of the two notions. Cryptocurrencies are prized for their anonymity, but the blockchain is mostly about transparency. In order to be applied to specialized sectors, the blockchain needs to meet specific requirements.
Although there are differences between cryptocurrencies and the blockchain, both of them work together in order to offer a great experience for the online user. However, it’s important to understand the two notions and not believe they are the same things. Instead, the blockchain is a lot more expansive and it goes well beyond just managing transactions. It can be very good for storing personal information, company data as well as make it easy for businesses to communicate and create smart contracts without having to worry about third parties accessing them. It’s a great, stellar system that has tremendous real-life applications!