The terms Blockchain and Cryptocurrency are widely used in the Crypto world and often go hand in hand. Due to the similarities and confusing differences between the two, these terms sound like synonyms and are used interchangeably many times.
Blockchain refers to the technology that makes the existence of Cryptocurrencies possible. On the other hand, Cryptocurrencies are just like conventional currencies but exist in a digital world.
Key Differences –
- Blockchain is a technology that is responsible for keeping track of records. In the Crypto world, it keeps track of crypto transactions.
- It is a technology that makes the existence of Cryptocurrencies possible.
- Blockchain technology does not have any financial or economic value.
- There are four types of Blockchain: Public Blockchain, Private Blockchain, Consortium Blockchain, and Hybrid Blockchain.
- Blockchain Technology holds its purpose in Crypto World, Banking, Healthcare, Business, etc.
- Cryptocurrencies are digital currencies that operate internationally, being the medium for purchase and sales.
- It is a currency that acts as a medium of exchange.
- These currencies have financial or economic value.
- There are two types of Cryptocurrencies, namely Coins and Tokens.
- The only purpose of Cryptocurrencies is to buy and sell.
Comparison Between Blockchain And Cryptocurrencies
|Definition||Blockchain is a technology that is responsible for keeping a track of records. In the Crypto world, it keeps the track of the crypto transactions.||Cryptocurrencies are digital currencies that operate on an international scale, being the medium for purchase and sales.|
|Nature||It is a decentralized technology.||It is a digital or virtual currency.|
|Invention||It was invented back in 1988 by two scientists: Stuart Haber, and W Scott Stornetta.||It was invented back in 2008 by Satoshi Nakamoto.|
|Purpose||Its purpose is to store large pieces of information in the form of blocks.||Its purpose is to act as a medium of exchange for buying and selling purposes.|
|Economical Value||It does not have any economical or financial value.||It has a huge financial and economical value.|
|Dependence||This technology is completely independent.||It is completely dependent on Blockchain Technology.|
|Anonymity||Due to the presence of huge transparency, it is impossible to stay anonymous in a blockchain network.||It is very easier to stay anonymous in Cryptocurrency transactions.|
|Transferability||It is impossible to transfer Blockchains.||It is very easy to transfer cryptocurrencies.|
|Types||It is of four types: Private Blockchain, Public Blockchain, Consortium Blockchain, and Hybrid Blockchain.||Crypto can be broadly classified in two categories, namely Coins and Tokens.|
Major Differences Between Blockchain And Cryptocurrency
What exactly is Blockchain?
Blockchain is the technology responsible for keeping track of large chunks of data. This technology stores data in blocks. And several blocks are used connected by each other to store a large chunk of information. It is similar to what a database does.
Databases are known for keeping track of records, and Blockchain does the same, except that Databases contain information in the forms of rows and tables.
In contrast, Blockchain contains information in the form of Blocks. It starts storing information in a block, and when it is filled, it stores information in another block connected by the previous block. Thus, it is called Blockchain.
Blockchain Technology is used in several places such as businesses, Banking, Retail Sector, Healthcare, etc. However, it is most widely used in the Crypto world. This technology keeps track of crypto transactions happening in real-time.
There are four types of Blockchain Technology: Public Blockchain, Private Blockchain, Consortium Blockchain, and Hybrid Blockchain.
Advantages and Disadvantages of Blockchain –
- No middlemen are involved in Blockchain transactions; thus, one does not have to pay brokerage or bank fees.
- Blockchain Networks’ information is available on every system rather than in a specific place, which makes it difficult to be tampered with.
- Anyone can view the information that they desire whenever they want.
- It is a decentralized technology; hence it is easier to verify blockchain transactions.
- Blockchain Technology is not governed by any authority, which makes it easy for criminals to misuse it for illegal purposes.
- Companies adopting the Blockchain method for data storage have to bear high costs to adopt it.
- Blockchain gives rise to unemployment as it does not involve any middlemen like a broker or bank.
What exactly is Cryptocurrency?
Currency simply means a medium of exchange. Years ago, when currencies did not exist, Barter System prevailed in our societies worldwide.
But Barter System was not a reliable medium of exchange. That is when Currencies were invented. Now, we have just gone one step ahead in our conventional currencies.
Cryptocurrencies, like our conventional currencies, are a form of currencies that operate at an International Level and exist on the Internet. That is why Cryptocurrencies are also known as Digital Assets or Digital Currencies.
These digital currencies are called “Crypto” cause Cryptography backs up these digital currencies. There are two types of Cryptocurrencies, namely Coins and Tokens.
Since any central unit does not govern cryptocurrencies, then how do Cryptocurrencies keep track of their transactions? The answer is through Blockchain Technology. This technology is the very reason Crypto exists.
It is responsible for keeping track of all the Crypto transactions. Some of the most famous cryptocurrencies are Bitcoin, Ethereum, Tether, Cardano, USD coin, Stellar, Polka Dot, Dogecoin, Litecoin, Solana, etc.
Advantages and Disadvantages of Cryptocurrencies –
- Cryptocurrency transactions are very fast as compared to our traditional currencies’ transactions.
- Cryptocurrencies make it possible for one to stay Anonymous in the digital Crypto world.
- There are no middlemen involved in Crypto Transactions.
- All of the Crypto transactions are recorded with the help of Blockchain Technology.
- Crypto comes with a “Virtual or Digital Wallet” that helps to keep currencies.
- Cryptocurrencies are not governed; criminals widely use them for illegal uses.
- These currencies are not legalized everywhere.
- It is very easy to lose your digital wallet.
- One can be vulnerable to cyber-attacks and scams.
Contrast Between Blockchain And Cryptocurrency
- Blockchain – Blockchain is the technology responsible for keeping track of records. In the Crypto world, it keeps track of crypto transactions.
- Cryptocurrency – Cryptocurrencies are digital currencies that operate internationally, being the medium for purchase and sales.
- Blockchain – Blockchains are of four types: Public Blockchain, Private Blockchain, Consortium Blockchain, and Hybrid Blockchain.
- Cryptocurrency – Cryptocurrencies are mainly of two types: Coins and Tokens.
Types of Cryptocurrencies –
- Coins – Crypto Coins are coins that operate on their own blockchains. These coins are currency.
- Tokens – Crypto Tokens, unlike Crypto coins, operate on other Coins’ Blockchain. They do not have their own Blockchain. These Tokens are assets.
Types of Blockchains –
- Public Blockchain – As the name suggests, public blockchains are easily accessible without any restrictions.
- Private Blockchain – Owned by a single organization, these blockchains require users’ permission to access data. And the permissions are granted only to a particular set of data.
- Consortium Blockchain – These blockchains are handled by a group of organizations with lesser restrictions than Private Blockchains.
- Hybrid Blockchain – Hybrid Blockchain is a blockchain with private and public Blockchain features.
- Blockchain – Blockchain is a decentralized technology.
- Cryptocurrency – Cryptocurrencies are currencies that exist in the virtual or online world.
- Blockchain – The purpose of Blockchain is to keep track of records.
- Cryptocurrency – The purpose of Cryptocurrencies is to buy and sell.
- Blockchain – Blockchain Technology has no financial or economic value.
- Cryptocurrency – Cryptocurrencies have a high financial or economic value.
- Blockchain – The transparent nature of Blockchain technology makes it impossible to stay anonymous in a blockchain network.
- Cryptocurrency – It is very easy to stay anonymous in Crypto transactions.
- Blockchain – Blockchain technology can not be transferred.
- Cryptocurrency – Cryptocurrencies are easily transferrable.
- Blockchain – Blockchain technology is a completely independent technology.
- Cryptocurrency – Cryptocurrencies are dependent on blockchain technology.
- Blockchain – The history of Blockchain takes us back to 1988, invented by two men, namely Stuart Haber and W Scott Stornetta.
- Cryptocurrency – Cryptocurrency was invented back in 2008 by Satoshi Nakamoto.
Blockchain technology was introduced in 1988 by two scientists, Stuart Haber and W Scott Stornetta. However, it was not until the invention of Cryptocurrency that the usage of blockchain technology boomed. Satoshi Nakamoto invented Cryptocurrency in the year 2008.
The invention of Cryptocurrencies made it very popular for Blockchain Technology since this technology is the very reason for the existence of Cryptocurrency.
Since the terms are mostly used together, they are taken as synonyms, but both things have varied differences. Blockchain is a decentralized technology that is known for keeping records of information in the form of several blocks.
On the other hand, Cryptocurrencies are online or virtual currencies used to purchase and sell things.
Frequently Asked Questions (FAQs)
Q1. What is the difference between Crypto Coins and Tokens?
The major differences between Crypto Coins and Token are –
1. Crypto Coins have their own Blockchain, whereas Crypto Token operates on other coins’ blockchains.
2. Crypto Coins are currencies, while Crypto tokens are assets.
3. Crypto Coins can be used to buy Crypto Tokens, but Crypto Tokens can not be used to buy Crypto Coins.
Q2. What is the difference between Private Blockchain and Consortium Blockchain?
The major difference between Private Blockchain and Consortium Blockchain Is that the former is owned by a single organization while a group of organizations owns the latter.
Q3. What are the major differences between Blockchain and Cryptocurrency?
The major differences between Blockchain and Cryptocurrency are –
1. Blockchain is a decentralized technology, whereas Cryptocurrency is a digital or virtual currency.
2. The purpose of Blockchain Technology is to store large chunks of information in the form of blocks, whereas the purpose of Cryptocurrencies is to act as a medium of exchange.
3. There is no economic or financial value to Blockchain, whereas Cryptocurrencies hold an economic or financial value.
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