What’s the difference between blockchain and cryptocurrency and how they work together?
Blockchain as a Technology
When Bitcoin is the only blockchain, there is not much difference between the terms, they are used interchangeably. As the technology matured and various blockchains flourished, these uses quickly moved away from the purely monetary aspect.
Blockchain is a distributed ledger technology that forms “chain blocks”. Each block includes information and data that are bundled together and verified. These blocks are then validated and connected to the chain of transactions and information from previous blocks.
These blocks of transactions are permanently recorded in a distributed ledger that is a blockchain.
Cryptocurrency as an Asset Class
Cryptocurrencies are decentralized networks that operate under blockchain technology. They are not issued or managed by any central authority. Cryptocurrencies are resistant to government interference or manipulation. Cryptocurrencies can be viewed as tools or resources on a blockchain network. Anything dealing with buying, selling, investing, trading or other currencies involves blockchain.
Differences and Collaborative Work
Blockchain is a platform that makes cryptocurrencies work. Blockchain is a technology used as a distributed ledger that makes up a network. The network creates the means of transaction and enables the transfer of value and information.
Cryptocurrencies are the tokens used in these networks to send value and pay for these transactions. Additionally, you can think of them as tools on the blockchain that can be used as resources or utility functions in some cases. Other times, they are used to digitize the value of an asset.
Blockchain as the underlying technology of which cryptocurrencies are part of the ecosystem. They go hand in hand and often require encryption to transact on the blockchain. But without the blockchain, we would have no way to record and transfer these transactions.