It’s highly improbable that any discussion of cryptocurrencies or blockchain technology will completely omit Bitcoin. Bitcoin is sometimes referred to as the king of cryptocurrencies by gurus. While to some extent this may be true, the sudden rise and fall in this currency’s value (in recent years) have given it the appearance of a financial outlaw.
How do blockchain and cryptocurrencies connect to one another, and can any one be useful on its own? Let’s try to convey the actual problems at hand while avoiding the techie jargon. A blockchain can be compared to a network, namely a unique network with numerous nodes. The nodes in a blockchain are all equally significant, in contrast to the server client networks that the majority of us are familiar with.
Any information that needs to be entered onto a blockchain would be done so on one of the nodes. The information input is updated simultaneously on all nodes, which is the key component of blockchain technology. In the event that there is a circumstance when the information on all nodes is not the same, a blockchain can be set up to indicate an error. This increases the level of data security and fosters a setting where hacking and penetration are very challenging.
So now that the fundamentals of blockchain have been discussed, let’s try to describe how a cryptocurrency works. You may hear phrases like “digital currency” or “crypto” used to describe crypto currency. A configured blockchain must be present in order to implement and run a cryptocurrency. Cryptocurrency buyers have the option of making a “purchase” with traditional money or another cryptocurrency. Any blockchain-based platform accepting a particular cryptocurrency can be used to pay for goods or services. It’s crucial to realize that digital currencies can be created on one blockchain and used on the same blockchain or a separate one. A blockchain must be configured to receive or accept a certain coin as a basic prerequisite.
Let’s try to imagine a scenario in which blockchain technology and cryptocurrency coexist without one another now that we have a fairly clear understanding of both. We explained that a blockchain is used to build a crypto currency. A cryptocurrency can be used over any blockchain that is set up to accept it, even the blockchain that issued it. The conclusion that a cryptocurrency cannot exist without a blockchain can be drawn without much thought.
Let’s examine the opposite scenario, which is a blockchain without an associated crypto currency. Is such a setup feasible, and if so, would a blockchain with such a configuration be useful in the real world? The majority of competent people in the business and government sectors have started to recognize the significant utility and value of blockchain technology, which is a really exciting situation.
There are numerous instances where blockchain technology is being used to its full potential without the need for or use of cryptocurrencies. More than a dozen ministries are carefully examining the prospect of moving public health service operations to a blockchain. This is anticipated to increase productivity, offer quick diagnosis and treatment, and lower overhead costs.
DeBeers, a titan in the glimmering diamond industry, just put a diamond blockchain in place. The widely reported project’s goal is to maintain a central repository for comprehensive data on various diamonds. This enables the tracking and following of the histories of various gems. DeBeers has made it quite clear that no diamond trading will take place on the site. The project does not have any plans to use a cryptocurrency.
