- March 3, 2022
- Comments: 0
- Posted by: Katherine Hoffman
I’m sure you’re thinking something along those lines. Isn’t it obvious? When you ask most people what the difference is between cryptocurrencies and blockchain, they’ll tell you that one is digital money and the other is the technology that powers it. Depending on whether your source has a technical background or not, you could do something like this.
However, referring to cryptocurrencies as “virtual money” and blockchain as a “technology” suggests a distinction between the two, whereas the two are inextricably linked.
Cryptocurrencies are digital assets that can be sent peer-to-peer without the requirement for a central authority to act as a trust source (and taking fees). As we all know, not all cryptocurrencies are the same. There are a lot of fake tokens on the market. There are also a lot of great enterprises out there with meaningless tokens that have nothing to do with their business concepts.
There are also cryptocurrencies that are more than just digital money, such as Bitcoin and Ethereum. If you want to learn more about why cryptocurrency is so closely linked to the blockchain, see the Ethereum FAQ page.
To begin with, using the term “blockchain” is inappropriate because there are numerous blockchains. It’s significantly more appropriate to refer to blockchain technology or blockchains as a whole.
Putting aside the notion of a chain of blocks interconnected by hash pointers and Merkle trees, blockchains are essentially record-keepers shared across thousands of machines. Any modification to a single record must be approved by all of the network’s systems.
All cryptocurrency transactions and movements are recorded on blockchains, eliminating the need for a bank. Due to the decentralisation of servers, it’s also exceedingly difficult to tamper with.
The Terms “Cryptocurrency” and “Blockchain” are interchangeable.
Cryptocurrency and blockchain technology, according to Steve Tendon, a senior member of Malta’s National Blockchain Task Force and creator of Malta’s National Blockchain Strategy, cannot be separated.
As a result, in the areas of government, finance, and even the general public, cryptocurrency is frequently viewed as something undesirable, even criminal. Although cryptocurrency is linked to money laundering and frauds, blockchain technology is widely accepted.
“That negative remark (about cryptocurrencies) is frequently opposed by a favourable statement (about blockchain technology),” Tendon observes. For me, the two are inseparable. In blockchain technology, a smart contract notion is what makes it so intriguing and fascinating, leading to all of these enormous possibilities to change any industry area (for decentralised computation). You can’t have a smart contract platform as sophisticated as Ethereum’s without a coin to pay for the processing. As a result, the distinction between bitcoin and blockchain is purely artificial.”
While it’s crucial to distinguish between the many aspects of bitcoin and blockchains, it’s difficult to do so because they’re so interconnected. Indeed, this is what prompted Malta to pass new legislation that recognises that cryptocurrencies can be hybrids and that decentralised computation must be paid for in cryptocurrency, rather than merely identifying them as “securities” or “utilities.”
So it’s not an issue of good vs evil, right versus wrong; the division simply “shows that there is a lack of knowledge,” according to Tendon. The veil surrounding the two should clear very quickly as all of these notions begin to be integrated into our regular language. Look up the top crypto news for further information.