The Relationship Between Blockchain and Cryptocurrency – 2020 Guide
Probably the two most popular terms in the world of finances are cryptocurrency and blockchain. Most of the time they can be found within the same sentence. Even though these two are completely different and they don’t have much common, the way for these two to collaborate has been found. But, each of these two terms deserves their own explanation. So, we are going to do just that. Later, we will talk about their connection and how they use each other.
The Blockchain Concept
As you can presume, the term blockchain requires a lot of effort in order to be explained in the best possible way. The simplest way we can describe it is decentralized, digitalized, public ledger. It consists of blocks, filled with digital information, who are them connected into chains. These chains have the potential to become bigger, to have more of the blocks inside them, with every verifiable transaction that occurs. What is the connection with cryptos, you ask?
Well, the connection is that cryptos are operating through the blockchain system. Also, it uses pretty much every feature used by the system itself. Plus, there is absolutely no authority over it, which is exactly the same concept as the blockchain. If you are interested to take a look at some of the smartest ways you can use blockchain for, take a look at iedunote.com. You will see that this concept has a lot to offer and that people will use it much more in the future, without a doubt.
The Concept of Cryptocurrencies
Cryptocurrencies can be best described as digital currencies. This concept has been established after the introduction of Bitcoin, back in 2009. Now, this list of cryptos is much bigger than it was at that time. So, it could be said that around that time, Bitcoin was the only blockchain system that existed. All of us know that, back then, there were a lot of critics and skepticism about cryptocurrency’s concept. Thankfully, it managed to achieve a certain level of recognition over the years.
Today, we can see that both of these concepts are major players in the world economy and finances. At the same time, we can see that legalization of these systems has become in some of the countries. For example, Belarus was the first country in the world that completely legalized all digital currencies and made them tax-free until 2023. It should be said that this was the right move by the country’s government since this adaption will be an example that all countries will follow in the future.
What’s the Connection Between These Two?
The best possible way to describe the correlation between these two concepts is to say that digital currencies are just operating through the blockchain system. This means that this system is capable of doing much more than that. In the last couple of years, experts have started taking a more thorough look at this system and what it can be used for besides that thing it used for now.
What we’ve been able to see from these various researches is that blockchain’s potential can be used for a plethora of different things. Especially those who are important for the security of the data. However, it was officially stated that the full potential is not yet realized that it could take experts for a couple of decades to reach the full potential of this concept.
This is something that’s not common in the world of technology. Therefore, we cannot even imagine what this system is capable of. We are just going to wait and see that surfaces over time. One thing is for certain, this will provide the humanity to do many exceptional things related to the world of business and security. Some of them will be so large and important that they could be called a small revolution.
What are the Benefits of Using Cryptocurrencies?
Remember, the concept of Bitcoin was introduced almost immediately the global market crashed back in 2008. It looked like the world is in need of finding a new source of money, that will become independent from the official institutions since they can be unreliable in times when the crisis reaches its climax. Therefore, the whole idea was to introduce a completely new concept that will provide some of the benefits that will simply make people use them. Let’s take a look at some of these benefits.
- Instant Payments
As we all know, centralized institutions like banks will charge you with a fee and you will need to wait for a couple of hours before you are able to receive the transaction money.
- Small Transaction Charges
Since digital currencies are not dependent on any centralized institution, you cannot expect it to ask for a large transaction fee. In fact, it’s pretty small.
We are talking about a completely independent system that doesn’t correlate with any other one you can think of, right? So, the risk of having your information attacked is at a minimum.
Availability is one of the most important traits of digital currencies. You can be sure that you can transfer from any kind of device, where you need to have your own wallet. Also, you need to find an ATM where you can receive the coins you are expecting.
Why Should We Use Blockchain?
Now, let us take a look at some of the most important reasons why someone should use the blockchain system.
We’ve already stated numerous times that blockchain is a completely decentralized system from every other system you know about. Therefore, you will have complete control over your information. Nobody else will have access without your permission.
Due to not having any kind of, let’s say, middleman, between two parties, you will be able to have complete transparency over the data transfer you have without any other authority above you.
This system is officially regarded as one of the unbreachable systems in the world. The reason is there are so many layers of security. Plus, some of them can be considered impossible to crack. Therefore, it shouldn’t come as a surprise that many consider it unbreachable.