If you know about cryptocurrencies, there are good chances that you also know about the blockchain. Cryptocurrencies are a digital store of value operating with the blockchain technology. It is very easy to talk about cryptocurrencies and the blockchain as the same thing. Although there are differences between both, and the terms really refer to related but different things.
Let us talk about Microsoft Windows for example. The Windows operating system is a Microsoft product and applications like Microsoft Word and Adobe Photoshop run on the operating system. When you run an application on your computer, your computer adjusts to respond to the command given by the application. The application runs on your computer’s operating system but at the same time, your computer responds to the commands from the application.
The situation is the same for what happens on the blockchain. The blockchain is a record of transactions that increase continually. Each block is connected to the previous block with a cryptographic function called a hash function this way, every block on in the network has the cryptographic hash of the previous block. The record entered into this ledger is open source. This means that it is visible to everyone in the network. The uniqueness of the blockchain technology makes it impossible to alter recorded transaction. The application of the blockchain is not limited to use as a ledger. When used as a ledger, a peer-to-peer network manages the blockchain.
Cryptocurrency is the first proven application of the blockchain. When the mysterious Bitcoin creator Satoshi Nakamoto launched bitcoin in 2008 as a peer-to-peer network for transactions in a distributed ledger, the world welcomed the revolution of cryptocurrencies with the blockchain. Bitcoin is one example of a cryptocurrency powered by the blockchain. The value in bitcoin is coming from its use as a unit of measure of transactions to be sent and received in the blockchain in what is traditionally referred to as tokens.
Cryptocurrencies existing at the time of writing this article are more than a thousand. Each of this cryptocurrency except for some forks like bitcoin classic and bitcoin gold are unique innovations from the original blockchain technology. Etherium a cryptocurrency running on the same blockchain platform also provides a scripting language for application development. This makes it possible for developers to create software native to the etherium blockchain.
There is no clear-cut difference between cryptocurrency and the blockchain this is because the underlying mode of operation of nearly every cryptocurrency is not different from that of the blockchain. There have been modifications but these modifications are mostly in differing applications of the same thing and adjustments where possible to ensure accurate delivery.
The major problem of the original blockchains like bitcoin was its transaction time and scalability. These terms are interrelated. You can understand this ordinarily as the speed with which transfer of funds on the platform is completed.
This article attempts to compare and point out differences between the blockchain and cryptocurrencies. The differences are slight and the terms started as a reference to the same thing. With the emergence of altcoins, this debate is much heated.