Blockchain Technology

The Relationship Between Blockchain and Cryptocurrencies Explained

In the present milieu, there is a lot of confusion between the two words, “Blockchain” (BC)and “Cryptocurrencies” (CC). Till recently, when BITCOIN was the only form of Cryptocurrency in circulation, both the term BITCOIN and the Blockchain were often used as interchangeable. But a whole bunch of Cryptocurrencies appeared on the horizon, and BITCOIN was no longer the Lone Ranger. Blockchain now applied to many of the new Cryptocurrencies, and the uses quickly diverged from the pure money aspect. But a kind of relationship between Blockchain and Cryptocurrencies remained in the public’s mind, even though Blockchain was now seen to have a large number of applications, which were not related to Cryptocurrencies at all. To understand the reason behind this confusion, we need to study each term separately first. Only then, will we find The Relationship Between Blockchain and Cryptocurrencies Explained.

Blockchain

A Blockchain is basically a term from the library of accountants. ‘A chain of Blocks’ is formed by way of a distributed Ledger Technology. Every Block contains data and information that are verified and bundled together. These Blocks, after due validation are allowed to create an unbreakable chain of transactions and information, with other previous similar Blocks. Each Block of transaction, forming the Blockchain, is permanently recorded and set in the order of the transaction. This Blockchain accompanies the deal or product wherever it is next transacted.

Double Entry Bookkeeping has been used, by Accountants, for thousands of years, to ensure free and fair transactions between the two participants in a transaction. In this system, two separate Ledgers are maintained, by the two separate participants in the transaction that keep track of all debits and credits. This Double Entry Bookkeeping has been the biggest underpinning of our Financial System, since ancient times. In modern times, the Banking system works on this same principle, of maintaining separate Ledgers with the Bank and its Customer. Only the Customer and the Bank has access to this information. This is the basic concept of Blockchain, where the Ledger is distributed for public scrutiny, and becomes completely transparent. This has been around since the 90s, but was always found impractical for actual use.

But in 2008, a thunderbolt of a paper, by the then unknown Satoshi Nakamoto, related Block chain with a proposed new decentralized Cryptocurrency, called BITCOIN. Later in the year, this new virtual money was actually released on the Internet, and found an enormous reception amongst people, who had been struggling against governmental control and regulation of money. The BITCOIN was born.

Cryptocurrency

Any currency is a medium of exchange that can be used to carry out financial transactions, regulated by the use of money. Money as we have known it, is a centralized medium of exchange, the unit value of which, in comparison to other currencies, is determined by the regulation and control of individual governments and their central banks. The final value of that currency is determined the parity value against other leading currencies, as well as by the supply of that currency in the market. This supply is regulated by the government and its central bank, by printing as much money as required for that time. There is no upper limit of the quantity of money that can be printed, by any country, and is said to be determined by the needs of that country.

This is the way money has existed in human society, since the beginning, first as Coins, then as Paper Money and finally as Virtual Money in Banks. But Cryptocurrency has brought a complete revolution in our understanding of money. A Cryptocurrency is defined as a Digital or Virtual currency designed to work as a medium of exchange. Transactions are verified and secured by the use of Cryptography. The supply of Cryptography in a Database is pre-determined under fulfillment of specific conditions. Where all other previous attempts at creating a Digital Currency, like DigiCash and Flooz, during the 90s peak period, have completely failed, the new Cryptocurrency movement that came with the release of the BITCOIN in 2009 is proving to be a real success.

The Relationship

The new currency was called “Crypto-currency” for a reason. The failed previous new currencies used a Trusted Third Party to verify and facilitate the transactions. But this was only partial Decentralization, and did not prevent the many ills already incumbent on “Fiat Money” (as traditional money was now being called). There were a whole host of features of Crypto-currencies that were truly novel, such as P2P (Peer To Peer) transactions, a total limitation to the number of BITCOINS which could ever be created or released, along with a time-span, and the Crypto Files that were used as Currency in the new dispensation. This was the addition of the Blockchain, which rendered all transactions completely transparent, and further, free from double payment.… Read On...

What is Blockchain?

Blockchain is a record keeping method with the protected system to avoid hacking and other malpractices. Blockchain, as the name suggests, is an imaginatively connected block where blocks act as the information related to purchases, time, name and amount. These blocks are connected by a chain system as a public database. The system seems to be linear, but it doesn’t particularly have to be linear considering 562000 bitcoin purchases till this year. The main purpose of the blockchain is to be available to everyone without concerns regarding the change of details by unidentified persons. When a person does try to change the details, he would have to edit all the following bitcoin purchase details, which is quite not possible considering the connection among different blocks.

The uniqueness of Blockchain:

The hash code: Each block has its hash code. In case a hacker attempts to change the details of a block, the hash code would automatically change. This would lead to a change in the following hash code connected to the next block.
Decentralization: Decentralization is having the information all over the place. With each additional information to the block chain, the systems get new blocks. In the case of malpractices, one cannot simply change the details, as they would end up changing it for one information center while the rest of the blockchains have old blocks of data. The process of editing all the millions of data is highly impossible, especially when they do not know the exact chain links between each block.
Transaction security: Transactions made are secure and can be confirmed within ten minutes. Once the bank confirms it with the system, these are usually updated in the block chain immediately. In case of a different country transaction, it might take some time till all the payment mediators communicate and confirm the transaction. This is similar to other transactions that happen online and are equally secure. Many block chain systems do not charge for a transaction like bitcoin. In case someone wants to change their details on a particular block, the confirmation system exists where the need to prove identification is needed. The confirmation process is designed with complete security, which lets the information to be changed without a change in further blocks. The user-friendly process made many companies and banks to follow the block chain method.
Public view: In spite of the information open to the public eye, the confidential details like addresses aren’t available, making the system anonymous. When someone wants to change their details, changing them would lead to a change in details in all other computers. If one computer is managed or changed without confirmation other computers wouldn’t make the same mistake over and over again. Technology, when used effectively, can be the most regulated form without any malpractices. Millions of people have access to the data, and changing the data even for one block would mean being observed by the millions of eyes. The public view is of high advantage for the blocks.

Applications:

Bitcoin: The most famous application is the bitcoin block system. Bitcoins have become popular throughout the world. The system is open to every public eye. The engagement rates in bitcoin are very high with every second. Having a block chain system was perfect for bitcoin purchases and selling them
Companies: More than 50% of the companies already have a block chain into their systems. The other companies are expected to follow this within no time. The ability of the employees to have access to the data throughout the company is the main reason for its adaptability. As hacking the system and changing other person’s details is nearly impossible, the block chain system is perfect for companies with lots of data, from global companies to small local companies.
Banks: Banks are another place that has thousands of transactions going with every second. The security system for such an active database is impossible. Having a block chain database allows the transactions to go smoothly and without a transaction fee. Most of the banks already have block chain systems. Saving a lot of money, fast process and secured transactions have made a trustworthy way to have a block chain system in the banks. Both private and government bodies have been using the block system, where the data is exposed to the public eye without concerns about the hacking body.
Healthcare industry: A major industry, having large databases from time to time about the patients, medicines and other employee details make the system complex and clumsy. Having the block chain system simplifies the process for the employees in the sector. This can be used in both pharmacies and hospitals. Pharmacies have medical reports, medicine lists, employee lists, and many more details. Storing the data with the utmost security and being made it open to the employee members or team members.
Other sectors: Many industries need the information to be kept publicly. Especially government bodies, which need to record the details of the public like property records, or identity records of a person. Having a secure system is tiresome and lengthy. The blockchain system battles the odds by having an adaptable environment to both public and government systems. Contract builders and supply chain use systems also need to have large data records stored effectively, which use the block chain system. Of course blockchain can be a strong asset for companies that operate online. Many adult websites and adult dating apps like local sex app utilize blockchain to provide security for their users. It is not uncommon for adult content companies to be early adopters of new technology.

Things to improve in a Blockchain system:

The original construction of the block chain system was to eradicate the hacking hazards and make it simpler and easier for everyone. However, the few disadvantages have stopped the many sectors to use the block chain system as it can cost millions when something goes wrong. The technology cost is high compared to other methods. The cost of storing data securely is in the millions which cannot be afforded by every company or bank or private sector. The speed for recording every data can be faster. As thousands of data are added at once in a blockchain, the speed decreases, where one data has to wait to be uploaded for the earlier data. Despite the safety of a hacker, illegal activities in the bitcoin industry are many. Purchasing bitcoins illegally and selling them in different sources having caused chaos. Banks have concerns about the block chain system. The need to have a better system, which wouldn’t jeopardize banks … Read On...