Can Blockchain exist without cryptocurrencies?

Be the First to Comment Read

Can Blockchain exist without cryptocurrencies?

 Can Blockchain exist without cryptocurrencies?
Image source: © Juliatimchenko | Megapixl.com

Highlights

  • Blockchain can be described as a unique network that acts as a distributed ledger that shares nodes of a computer network with each other.
  • In its simplest form, cryptocurrencies are digital currencies that are secured by various cryptographic codes.
  • In its simplest form, Blockchain is the underlying technology on which cryptos operate.

Whenever one starts a conversation around cryptocurrencies, a couple of things do pop up in the conversation - which Blockchain does it operate on, and is it safe? Many of the market novices have a long-held debate and query as to how Blockchain and cryptocurrency are related and whether one can exist without the other. 

But with the world already witnessing several use case scenarios of blockchain technologies, it’s a pertinent question – Why Are Blockchains Essential, and How Do They Impact Our Daily Lives? In order to deep dive into the ability or disability to co-exist with or without the other, one needs to understand what Blockchain and cryptocurrencies are and how they function.  

What is blockchain technology?

Blockchain can be described as a unique network that acts as a distributed ledger that shares nodes of a computer network with each other. As a distributed ledger, the Blockchain stores its information in a digital format that is genuinely decentralized in nature. 

Often dubbed as the engine that drives the cryptocurrencies, Blockchain in a crypto ecosystem ensures fidelity and data security, creating trust without a third-party involvement. What differentiates Blockchain from a typical database is its ability to store data. All the critical data are structured in a capacity that each block holds a set of information. 

Communication between blocks takes place through a peer-to-peer network system instead of a central node. This allows each node to store a separate set of information, which is then passed on to other nodes, forming a chain in the P2P format. This allows the blockchain network to flag any irregularities in case a situation arises where all nodes are not identical.  

What are cryptocurrencies? 

Now that we have understood the basics of Blockchain let’s deep dive into what cryptocurrencies are and where Blockchain fits in here. In its simplest form, cryptocurrencies are digital currencies that are secured by cryptography. Being decentralised in nature, and operating on blockchain technology, what sets cryptos apart are the fact a central authority does not issue them. 

Bitcoin was the first cryptocurrency developed by Satoshi Nakamoto, and as of today, there are over 20,000 cryptos in the market. It is essential to understand that while digital currencies can be conceived on one blockchain network, they can also be used on other blockchain networks and are often used as a mode of payment in accepted countries.  

How Blockchains are an integral part of cryptocurrencies 

In its simplest form, Blockchain is the underlying technology on which cryptos operate. Be it public or private, Blockchain can operate without cryptos, but cryptos can’t function without blockchains unless they lack decentralization or are run by a single entity. 

So, cryptos such as Bitcoin, Ethereum, etc., as they are permissionless, require a blockchain network to operate on, private cryptos such as Hyperledger, Corda, etc., don’t necessarily need a blockchain network to operate on as it creates distributed ledgers to support confidential commercial transactions.  

Can Blockchain exist without cryptos? 

Well, Blockchain today has varied usage not just in financial transactions but also in other sectors such as logistics, manufacturing, etc. Countries around the world have started to realise the potential that blockchain possesses and why it is essential to harness it. 

For example, the UK unveiled a detailed strategy in April to harness the power of blockchain technology to ease the process of making payments for customers. Former chancellor Rishi Sunak had stated his intention to make the UK a crypto hub, which is seen as a leading player in technological adoption. 

Even India’s Central Bank governor Shaktikanta Das stated that while the concept of cryptos is still a cause for concern, its underlying technology can exist and grow even without cryptocurrency.

Many experts believe blockchains have more utility value in the real world than in the virtual world. Financial institutions can use them for maintaining medical records, land records, etc. With the usage, it is expected to improve the efficiency of various departments handling the same and reduce the overhead costs.  

Conclusion 

While Blockchain is a critical element in the cryptocurrency world, the same necessarily holds for the other. Therefore, not only does it create increased traceability of transactions, but also offers a way where information can be stored, thereby allowing individuals and businesses to run their operations smoothly and in a hassle-free manner. 

With the world moving towards unique technologies, blockchains may have a role to play considering the feasibility and security aspects it provides. While there are a few, who believe that Blockchain must be used with a floated token as it reduces third parties and intermediaries. Blockchain usage, both with and without cryptos, presents a viable option for investors to consider.

Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instruments or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete, or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.

Disclaimer

Speak your Mind

Featured Articles