Blockchains and cryptocurrencies are both part of the ever-expanding universe of cryptographically managed and secured systems, but although they are commonly used as interchangeable terms, they are not the same thing. /P> ContentsBlockchainBlockchain Cheat SheetCryptocurrency Cryptocurrency Cheat SheetPerspectives
Cryptocurrency is, as the name suggests, a digital asset intended to be traded or used as a store of value. These fall under the broader category of "blockchain", which is an umbrella term referring to any set of technologies that employ a system of record keeping by cryptographically linking "blocks" of transaction data into a ledger. They are closely related in terms of the underlying technology (distributed ledger technology), but have key differences in how they are used.
The name is actually more descriptive than it sounds. Think of a blockchain as a long book of records with every transaction in every account written out in order. Each page is a block of transactions, and because they are numbered, they cannot be put out of order. Page 100 is "chained" to page 99 before and page 101 after.
Also, there are multiple copies of this ledger owned by different people, so if someone tries to revise new or old blocks, the change will not go into the master copy because most ledgers are not edited. 'OK. It is often referred to as a "trustless" system, because it is quite difficult (requiring at least 51% of the computing power on the network) to cheat.
Bitcoin and most other cryptocurrencies use these transactions to record financial exchanges, but many blockchains do not issue any currency, simply using the tokens as a means of communicating within their networks.
One of the areas closest to developing large-scale use of this type of blockchain is the supply chain industry, which uses digital tokens to represent items and shipments as they move. from place to place. Unlike most cryptocurrencies, many of these enterprise ventures are run by large, established companies like IBM, Maersk, Wal-Mart, Dreyfus, Royal Bank of Canada, and other entities that prefer to develop technology more private and controllable rather than participating in the larger open source movement.
Another buzzword you may hear associated with blockchains is "smart contract", which is basically a piece of code that can connect to and interact with the blockchain. These can be used to automate things that happen on blockchains, from accounting processes to fully functional programs.
Using them in combination with Turing-complete (capable of performing logical functions) blockchains like Ethereum or NEO means that blockchains can, in effect, run a decentralized "world computer".
As this was the first large-scale implementation of a blockchain, many people automatically think "Bitcoin" when they hear the term. However, Bitcoin is just one of many (some might say too ) cryptocurrencies that have emerged since 2009.
To be considered a cryptocurrency, the blockchain must include a form of digital money that can be distributed and exchanged, usually managed by a decentralized computer network. It's not necessarily anonymous, although some, like Monero (a leading crypto on darknet markets), are specifically designed to be.
Cryptocurrency is an application of blockchain technology, but it also comes in many variations. Some are tradable assets, like Bitcoin or Dash, which are primarily for paying people and storing value.
Some cryptocurrencies, however, use coins and tokens to assign value to other things, like Storj, which uses its currency to facilitate payments for file storage, or Namecoin, which is both a crypto -currency and a decentralized DNS. Some aren't even blockchain-based, like Nano or IOTA, which instead use "directed acrylic graphs" (DAGs).
The cryptocurrency space is widely considered volatile, as many of them are still in the making. Blockchains in general, however, are rapidly becoming more stable, with a lot of R&D thrown at them by both large, established companies and small, innovative startups. However, the biggest obstacle facing both technologies is ease of use:until a blockchain or cryptocurrency is as easy to use as the internet or a credit card, it is unlikely that go a long way with the average person.
Image credit:Descryptive.com via Flickr
