How Are Cryptocurrency and Blockchains Different?

If you are new to the world of cryptocurrency and blockchains, then understanding their differences might be a little confusing at first. At Bundlefi, we are here to help you understand and navigate the world of cryptography.

What Are Cryptocurrencies?

The easiest way to think about cryptocurrencies is as a virtual form of money. They aren't tangible or physical in form, like paper money. The term often used for most cryptocurrencies is "coins" or "tokens." The "crypto" part in cryptocurrency refers to the cryptography that allows these "tokens" to be used in online transactions. Advanced coding technologies do this. Another way to think about cryptocurrencies is a digital value placeholder used in the online commerce market. Since they are digitized and use cartography technology, they are very secure against counterfeiting. Unlike standard currency, government agencies are not issued, but rather are distributed by the users within the network.

What Are Blockchains?

In contrast, blockchains are essentially a form of public databases which anyone can theoretically access at any time. They interact with cryptography technology, which helps keep them more secure for users. The term "block" in blockchain refers to bundled transactions that are held together in data centers called blocks. As the blocks are strung together, they form a chain - hence the combined term "blockchain." In other words, it’s a database of ordered transactions that can be accessed from anywhere by anyone worldwide versus through a centralized server.

Comparing Cryptocurrencies and Blockchains

If we compare these two cryptography-based systems, we learn that they have a lot in common regarding technological advancement. However, they also serve different purposes and are very different platforms. Blockchains use cryptocurrency to operate through a decentralized system. In a sense, they are a ledger for the network transactions of cryptocurrency. A blockchain can transfer value and information and track these transactions efficiently. On the flip side, cryptocurrencies are "coins" or "tokens" used within these blockchain systems to send values as payment. As a result, the relationship between blockchains and cryptocurrencies is symbiotic. The blockchains operate cryptocurrencies, and the cryptocurrencies store their transaction information in the blockchains.

Learn More with Bundlefi

Understanding the difference between these two online commerce forms can be a little mind-boggling initially, but is quite simple in the end. At Bundlefi, we are here to help answer all of your cryptocurrency and blockchain-related questions. As the online commerce market expands rapidly, we want to help you succeed in all of your cryptography-related needs. Visit our website for more information.