Blockchain technology has become more and more widely used, and its popularity is mostly connected with the rise of crypto usage. However, is blockchain a cryptocurrency? As we’ll see, that’s not correct.
Crypto is only one of the most widely used applications of digital ledger technology, but due to the growing popularity of Bitcoin and Ethereum, these terms started to be used interchangeably. Therefore, we’re going to elucidate the key difference between blockchain and cryptocurrency, so as not to confuse them.
Let’s start by showing their similarities and differences and then conclude how blockchain can be used in various applications, improving different industries.
Blockchain and Cryptocurrency Differences
To avoid confusion, the simplest way is to see blockchain as an innovative technology to organize information, while cryptocurrency is the way to use blockchain for digital transactions and ownership confirmation.
Blockchain: The Technology
Basically, blockchain is a fundamental technology of a decentralized data network, where each new piece of data is added to the blockchain after proceeding, along with a unique cryptographic hash. Hence, all the information is stored on different computers, called nodes, connected in a network. It’s much harder to breach network privacy without accessing all computers at once.
As blockchain is a way to organize information, it can be used for various purposes. It ensures secure communication and data storage, where each piece of information can be confirmed without privacy breaches. When we’re talking about blockchain in cryptocurrency, we refer to the technology used specifically for money transactions.
Cryptocurrency: The Application
Therefore, crypto is one of the many possible scenarios for applying blockchain networks. In 2009, Bitcoin emerged as new digital money for secure transactions, and while initially met with skepticism, it has gained a lot of popularity, and it’s the most expensive currency today.
There are many examples of cryptocurrencies, created for various purposes. Many of them operate on different principles. Bitcoin, for example, acts as a secure payment tool, storing all transactions of all its users. Ethereum, on the other hand, works on smart contract basics, enabling much wider applications. That’s why a lot of decentralized apps (dApps) and non-fungible tokens (NFTs) use different Ethereum-based blockchains, such as Arbitrum and Optimism, for decentralized governance and secure ownership.
There are also stablecoins, cryptocurrencies backed by fiat money. Typical examples are USDC and USDT, pegged to the US Dollar, so their prices are always equal or almost equal to $1. They can be used for secure payments without large price fluctuations, typical for Bitcoin and Ethereum.
There are many cryptocurrencies on the market, each with its own unique properties. However, many of them can be used not just as a payment means, but also for dApp building, decentralized governance, and secure data management, utilizing various benefits of blockchain technology.
Key differences
Therefore, blockchain is a much wider term compared to cryptocurrency. For example, it can be used to organize logistic or location data securely, without fearing that privacy will be breached. Cryptocurrency is the approach to using blockchain for secure transactions, but there are many more ways to utilize its benefits.
Thus, it’s important to remember that blockchain and crypto are similar in their operations but different in application. Blockchain networks organize data securely and transparently, enabling people to communicate and store knowledge efficiently. Cryptocurrencies can be used either as digital money or ownership tokens. Use crypto for this, while not forgetting that blockchain networks can be used for many other purposes.
Blockchain Technology Benefits
Using the digital ledger can help wherever it’s necessary to exchange information securely and ensure that all parties follow the rules and responsibilities settled between them.
- Autonomous usage means that when you use a blockchain application, you own everything you have in it, be it content, messages, or game achievements.
- Transparent data: you can see all transaction history, check whether your funds have reached the destination, and explore various blockchain networks.
- Privacy doesn’t contradict the previous point: you’ll see all transactions between users, but not their real names, coordinates, or documents, as they aren’t needed here to confirm identity.
- Accessibility, as everyone can access the network via the Internet without the necessity to confirm their status or anything else.
Blockchain Applications
As you see, the comparison of blockchain vs cryptocurrency shows that crypto is one of the most common and efficient blockchain applications. Let’s wrap the article up by pointing out the various blockchain usage cases to see where it can be implemented to solve different problems.
- Logistics requires storing and managing a lot of documents and records, and a decentralized network facilitates it greatly.
- Insurance works with customer data that should be securely stored, and blockchain usage reduces the privacy breach chance greatly.
- Retail requires a lot of goods and money accounting, so blockchain can make it much easier and more secure.
- Governance implies collective decision-making and blockchain enables people to participate according to their contribution, eliminating corruption.
Therefore, for all enterprises where data proceeding, ownership, and communication are crucial, blockchain technology can be beneficial to ensure privacy while remaining transparent. To use it, you need a node provider that gives you an infrastructure for deploying your project. GetBlock is one of them, with 99.99% node uptime and plans starting from $29/month. Also, 40,000 blockchain requests are available for free each day, which is enough for personal usage and even small projects. Sign up now and try!
FAQ
If you have any questions left, let’s try to answer them here.
What are the differences between cryptocurrency and blockchain?
Blockchain is the fundamental technology of decentralized networks, storing smart contracts signed between users to ensure transparency and efficiency. Cryptocurrency is one of the technology applications, where these smart contracts are used as money transactions and digital assets.
How are cryptocurrencies and blockchain similar?
As cryptocurrency is a blockchain application, they both operate on the same principles: decentralization, transparency, and smart contract signing.
How blockchain technology can be applied in general?
Along with digital assets, blockchain can be used in all areas where information integrity, transparency, and privacy are important, such as collective decision-making, goods distribution, and governance in general.
