Blockchain vs Cryptocurrency
Blockchain = Chain of Blocks
A blockchain is a chain of blocks containing information/value linked through cryptography. Each block has a unique identity based on a cryptographic hash of the previous block i.e. a timestamp, and transaction data.
The beauty of blockchain is in its immutability.It is an open and distributed ledger that can record information permanently and in an efficient and authentic manner. The block chain like ledger resolves transaction on a digital platform which keeps a permanent and unalterable record of the transaction.
Cryptocurrency = Cryptographic Currency
Cryptocurrency is a digital transport medium built with cryptographic protocols that makes transactions secure.
Cryptocurrencies make transfers easier by incorporating public and private keys for security and privacy purposes. The transfers usually require a minimal processing fee. Comparatively to the traditional financial institutes, they offer edge to the end users.
Connection Between Them
Blockchain is a technology that works as a distributed ledger. As a network, it allows transaction of value and information.
The value and information are delivered through cryptocurrencies. It is a tool on blockchain that enables the flow of information/value.
Blockchain is a decentralized ledger where transactions are recorded across many users in a way that it cannot tamper without the consensus of the network.For example, If one wants to send some bitcoins,the nodes scan the entire bitcoin validate that
One has the bitcoin he/she wants to send and
Hasn’t already sent it to someone else. Once that information is confirmed, the transaction gets included in a “block” which gets attached to the previous block – hence the term “blockchain.” Transactions can’t be undone or tampered.
Cryptography requires authorized decoding and encryption. A blockchain network adheres to set protocols for nodal communication and validation of new blocks. Miners validate transactions while the process of mining requires an algorithm to validate and retrieve data. Cryptocurrency is a medium which uses encryption for regulation and generation of units of exchange. The entire mechanism from adding blocks to validating transactions is referred to as Blockchain Algorithm.
There are various blockchain algorithms, the most prominent ones being Proof-of-Work and Proof-of-Stake.
In the past few years, blockchain technology has endeavored many experiments. The core focus is on scalability, privacy, efficiency, and security. The technology is still in its early stages. Many organizations and governments are investing steadily in the blockchain. It is estimated that in the next few years 20-30% of IoT developments will be based on blockchain.
Many IoT based blockchain projects have managed to raise millions in funding. The amalgamation of Machine learning/Artificial intelligence is proving to be a major breakthrough in presenting efficient IoT solutions.
On the other hand, some of the largest banking institutions are focusing on blockchain projects, especially for payments. Many have begun testing blockchain-based solutions that could achieve same-day international transfers and cut down costs dramatically.
Out of all the applications of blockchain, one that has stood out the most is the possibility to develop B2B2C ecosystems. Huge bets are placed on the emergence of new ecosystems replacing many traditional industries. With the procurement of peer-to-peer transactions mechanism, there is a huge potential for a smart decentralized eco-system.
Extensive efforts are being made to bridge the gap between the crypto and fiat worlds. It is important to cover the gap as it dilutes the difference between the digital and real worlds.
The introduction of government cryptocurrency is inevitable. President Putin was the first to propose a national cryptocurrency, “Crypto Rouble”. The cryptocurrency is more efficient than fiat. It dramatically reduces settlement times, offers high traceability, and can be backed by real assets. Recently, Venezuela introduced its own Petro cryptocurrency supposedly backed by oil, gas, gold, and diamonds.
One of the most appropriate areas for blockchain in the supply chain. Currently, global trade is taking place in a chaotic and dispersed set of business relations that are dubious and inefficient.The inability to track the origin and certify authenticity is proving life-threatening. As per WHO estimates, tens of thousands of people die from counterfeit drugs every year.
Blockchain immutability will help greatly in designing identity systems by providing a single source of verification for individuals.
Blockchain decentralizes collected data, verifies it and stores information in an immutable ledger. This greatly reduces the risk of security, improves efficiency and brings self-sovereignty.
It will also provide the disenfranchised population with tools to obtain legal documentation. Blockchain-based platforms are more reliable because of their decentralized nature. Government records, certificates, medical records, tax records, and employment records all would be stored on a distributed ledger in the near future.