You might have heard of the terms ‘cryptocurrency’ and ‘blockchain.’ They are both taking grounds in the financial world and seem to be correlated. The idea is that cryptocurrency is operated on the blockchain technology. However, as time progresses and as the industry matures, they seem to be moving into separate directions this year. It’s best to understand what these directions may mean to those who are investing and participating in this decentralized financial revolution taking place around the world.
Cryptocurrency: Back on Track
In a nutshell, a cryptocurrency is a form of digital money operating in blockchain technology. Since it runs on a blockchain, it doesn’t require a third party to maintain it, such as a bank or financial institution. Cryptocurrency can then be transferred from one user to another.
In the last few months, cryptocurrency seems to have crashed for various reasons. This year, however, it seems to be getting back on its feet. One facet of it which is Bitcoin has gone up, doubling its worth since December of 2018. Apart from Bitcoin cash, Ripple’s XRP, EOS, and Litecoin, among others, have also benefited from the increase in value.
Blockchain: No Dependency to Cryptocurrency
As you may be aware, blockchain refers to a chain of blocks linked and secured with cryptography. Cryptography is a practice that allows information to be encrypted. In other words, blockchain shows a factual history of all the cryptocurrency transactions that have occurred. As such, cryptocurrency transactions perform on blockchain technology.
However, the catch is that blockchain has made a name for itself this year despite the recent decline of cryptocurrency. The blockchain market can survive without cryptocurrency. Because of this recent event, the actual value of blockchain is becoming more and more apparent. It’s becoming evident that cryptocurrency is only a tiny part of the blockchain market. It’s proving that blockchain is indeed decentralized, permanent, and secure.
Cryptocurrency and Blockchain: Moving towards Different Directions
It may have seemed to be good news that crypto’s value has risen these days. However, it no longer means anything to the blockchain market. As time goes by and as the industry evolves, cryptocurrency and blockchain seem to be trekking different directions. They are both starting to become two separate entities. While it’s true that cryptocurrency may use the blockchain technology, blockchain’s reputation is no longer determined by its relation with cryptocurrency. It can stand as an entity alone. Its overall success can be contributed by all other factors, apart from cryptocurrency alone.
Large-scale companies such as banks, financial institutions, and manufacturing companies have started to explore the potential and many possibilities of blockchain. On the other hand, cryptocurrency still has a long way to go as most physical shops, and e-commerce businesses have yet to accept cryptocurrency. In the meantime, blockchain will continue to move forward without constraints, while cryptocurrency is still confronted with such limitations.
Final Words: Is it one or the other?
It is worthy of knowing that blockchain and cryptocurrency aren’t the same things. Albeit they are yet intertwined in the market, for now, chances are they may both flourish some time independently in the future.
Even today, they are both manifesting their value. While cryptocurrency applies to financial exchange, the blockchain technology appears to have far more potential for every industry. These may include securing data management, tracing supply chains, eliminating fraud, and providing identification methods.
Soon enough, blockchain may have a far and wide scope. The use of blockchain technology has been trialed in government, and some countries are already conceptualizing the idea of ‘smart cities.’
Who knows what the future holds for both the blockchain technology and the use of cryptocurrency?