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Blockchain vs Cryptocurrency Differences 

Deen Newman

Deen Newman

April 26, 2024

7 分鐘閱讀

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Blockchain is a term that has become popular due to the growth of crypto. Therefore the two terms are often used interchangeably. But is blockchain cryptocurrency? Are they synonymous?

The two do evolve in parallel, however, digital assets are only a part of the utility of this technology. Explaining the key difference between blockchain and cryptocurrency comes down to understanding the fundamentals, purpose of each, and relationships between them, which we address in this article.

What is Blockchain?

The term is commonly used to refer to both the technology itself and decentralized networks built according to this technology.

In a broader sense, it is a digital record-keeping system or ledger that consists of a set of blocks arranged in a chain. However, instead of one place, the data is simultaneously stored across many computers worldwide.

blockchain_architecture_scheme

As for the role of blockchain in cryptocurrency, this data is related to transactions — records of digital asset transfers between users.

More often, the word is associated with concrete instances where the technology is applied: decentralized networks, chains, or protocols like Bitcoin, Ethereum, or Solana.

Benefits of Blockchain

Different protocols have their own pros and cons but share the same traits on the core level:

  • Resiliency: Each block contains a list of transactions and a unique cryptographic hash of the previous block, creating a tamper-resistant data chain; any attempt to alter information disrupts the connection, making manipulation evident;
  • Decentralized architecture: Nodes, many computers located globally, hold a copy of the ledger and record valid data, ensuring that a single entity can’t have full control;
  • Data integrity: Once added to the block, information cannot be deleted, rearranged, or altered in any way.

These provide a ground for using decentralized technology to share data that can be trusted and make it a secure accounting system for digital transactions.

What is Cryptocurrency?

Cryptocurrencies are assets that function similarly to traditional currencies, except in a digital format. In this context, blockchain is simply the framework, architecture, or foundation that enables these assets to exist.

When comparing crypto vs blockchain, it helps to understand that the latter provides the infrastructure for creating and storing virtual assets and a transparent way to keep track of their circulation.

The term generally covers two instances of digital assets:

  • Coins, mostly used to pay for operations of their native protocol (Ether in Ethereum or BTC in Bitcoin) then sent to miners or validators as a reward for verifying operations;
  • Tokens, minted on top of a specific network often based on audited token standards, usually support decentralized application operations.

Use cases of both types may vary but the common feature is they can be exchanged for certain goods or services, traditional currencies, or other crypto assets.

Examples of Cryptocurrencies

In the world of 2009, Bitcoin was the sole option to experience crypto. Today there are plenty of currencies, each differing significantly on a tech and governance level. Let’s see some of the top examples.

Top_cryptocurrencies_by_market_cap

Image from CoinMarketCap

Bitcoin (BTC)

Bitcoin, starting in 2009, was the first of its kind, creating a new way to use digital money. It enabled people who don’t know each other to make transactions as the way that data is stored and structured means that the process is difficult to counterfeit. Today it has the highest market capitalization and is primarily used for storage and accumulation of value.

Ether (ETH)

Ethereum came later in 2015 making the difference between blockchain and cryptocurrency more evident, as technology proved to be useful not only for transferring value but also for decentralized applications operations. Beyond its role as a native coin for Ethereum, it’s one of the most liquid cryptocurrencies, making it a preferred asset for DeFi. Holding ETH also lets users participate in validator activity and governance processes within the ecosystem.

Tether (USDT)

USDT belongs to a different type of digital asset classified as stablecoins available on multiple networks. Like USDC or DAI, it’s designed to peg to a fiat currency and allow investors to own a unit of account that represents a dollar. Because of predictable value it’s commonly used for everyday transactions, trading, and investment, as their stability allows traders to easily move funds in and out of the volatile market.

Dogecoin (DOGE)

One famous representative of a meme coin that originated as a playful parody of cryptocurrencies, featuring the Shiba Inu dog meme as its mascot. It gained widespread attention and a devoted following through social media. Despite its humorous origins, Dogecoin has evolved into a significant digital asset, valued by its enthusiastic community.

Blockchain vs Cryptocurrency: Key Differences

The simplest way to look into the relationship between blockchain and crypto, would be to define the first as a technology and the latter as products and one of the applications of this technology.

To bring more clarity, let’s outline the main distinctive features.

Category Cryptocurrency Blockchain
Definition A digital form of currency secured by cryptography and used for value transfer The fundamental technology supporting and securing cryptocurrencies
Use cases Transfer of value without involving intermediaries Organizing and securing storage and communication of data in general
Economic function Have worth or value similar to traditional forms of money Relies on cryptocurrencies as an economic incentive mechanism to sustain its operation
Examples BTC, ETH, BNB, SOL, USDT, DAI Bitcoin, Ethereum, BNB Chain, Solana

In summary, the underlying technology in general is bigger than cryptocurrency, which is only one case of how it can be applied.

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Similarities Between Blockchain and Cryptocurrency

The main takeaway from exploring the two concepts is that they are deeply connected. Digital money exists within and depends on decentralized protocols, and networks need an economic unit to power them.

Therefore, both share certain fundamental advantages and principles:

  1. Autonomy: Managed by code, cryptography, and community, both are free from centralized control, eliminating intermediaries that can censor and delay transactions or charge extra fees;

  2. Transparency: Anybody can download and run the node software to see the history of records, access the same data using API that connects to remote nodes, or simply via explorers;

  3. Privacy: While the records are public and visible to everyone, users are identified by unique digital addresses rather than personal details which allows for certain anonymity;

  4. Global accessibility: users can utilize decentralised services and assets without barriers and limitations only having access to the internet and crypto wallet.

Conversely, the comparison of blockchain vs cryptocurrency will also highlight similar challenges and limitations.

Conclusion

Although closely related, blockchain is distinct from cryptocurrency assets and extends beyond finance in its applications. Using it is also relevant to industries where proof of ownership and secure, efficient data storage and exchange are important, such as retail, logistics, real estate, or insurance.

Yet, for businesses and startups intending to adopt the technology, the process is often associated with high infrastructure maintenance costs. GetBlock is one of the node provider services that unlocks access to over 50 protocol nodes to effortlessly access data and deploy dApps on your preferred protocol. Sign up now and experience the simplicity.

常问问题

  • Is blockchain the same as cryptocurrency?

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  • Can blockchain operate without cryptocurrency?

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  • What is the main difference between blockchain vs cryptocurrencies?

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Deen Newman

Deen Newman

April 26, 2024

7 分鐘閱讀

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