Money in any form makes a man powerful. When the entire world is going digital, why not money? wwNow, there exists a form of virtual money that is different from the money in the physical world. It is also different from the online transactions that we make with and through our bank accounts. This is a decentralized form of money that is used for the virtual exchange of goods but does not get counted in our physical wealth. Cryptocurrency is a digital currency that gained momentum nearly a decade ago.
While our physical money is monitored by central authorities and the banking systems, the crypto-currency is decentralized and ledged by blockchains. Let us know in detail about blockchain, cryptocurrency and understand the relationship between the two.
Connection Between blockchain and Cryptocurrency
Before understanding the relationship between blockchain and cryptocurrency, let us know what these terms actually mean.
What is cryptocurrency?
A cryptocurrency is a digital form of currency used as a medium of exchange online. Its ledger is maintained in the form of a computerized database using strong security codes. It does not exist in physical form and is not issued by any central authority. It is based on a network that is distributed to a large number of computers. Yes, it can be said that cryptocurrencies are a form of digital tokens.
What is a Blockchain?
A blockchain is a systematically distributed ledger technology that does not need the involvement of a third party in monitoring the transaction. This is a decentralized platform where information is encrypted in a cryptographic manner. The main features of blockchain technology are one on one interaction, no third-party interference, decentralized transactions, cryptic data security, which can be traced within networks.
What is the connection between these two?
A lot of people get confused and state that these two terms mean the same. Though they have a deep connection, they are not synonyms. Let us understand the relationship between them.
Blockchains transcend cryptocurrencies. They are a functional feature of a cryptocurrency and are not of the same caliber as the latter. Blockchains have been designed to keep records of all the cryptocurrency transactions that take place in the peer-to-peer network. The blockchain acts as a ledger to keep the cryptocurrency transaction. Though these transactions are secret, their ledgers can be made public. Though this will not confirm who made the transactions but will give a confirmation about any cryptocurrency transaction that takes place. It is the cryptocurrencies that rely on blockchains.
In simple words, Blockchain is the platform on which cryptocurrencies like Bitcoin operate. We can also say that Blockchain is like the internet, which aids online transactions or exchange of Bitcoin or other digital currencies.
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