The cryptocurrency market is huge, but almost all the things in the crypto market revolve around three major terms that are cryptocurrency, bitcoin and blockchain. You must have definitely heard about these terms but may don’t know the exact meaning of these three. Here, in this article, we’ll learn about all these terms individually and their relationship with each other.
Talking about cryptocurrency, it is a medium of exchange that acts more like fiat currencies but is digitally present and uses cryptographic principles and encryption techniques to create the crypto units and verify and validate transactions. Bitcoin is the world’s largest and most popular cryptocurrency that works on blockchain technology. Blockchain technology is the technology that facilitates the existence of cryptocurrencies. These were the quick definitions of all three terms; now, let us dive into the world of these three and learn everything in detail. Get knowledge of all role of cryptocurrency
What is a cryptocurrency?
Cryptocurrency is created and stored over the internet on the blockchain, and it acts as a medium of exchange. It uses a blockchain that uses encryption techniques to provide a safe and secure environment to create the crypto units and to verify and validate transactions. There are thousands of cryptocurrencies, out of which Bitcoin is the most popular one. It is a decentralized digital currency that works independently.
The unique features of the cryptocurrency include no intrinsic value, no physical appearance and limited supply that banks don’t control. Cryptocurrencies don’t have intrinsic value, and these only exist digitally in the network. The government or banks don’t control the supply of cryptocurrencies as it works on a decentralized network.
What is Blockchain technology?
Blockchain is a distributed decentralized ledger that records all crypto transactions across a person-to-person network. The miners or participants of cryptocurrency can use blockchain technology to confirm the crypto transactions without any help from central authorities. The potential applications of blockchain technology include voting, settling trades, fund transfers and more. Bitcoin is the first cryptocurrency that is based on blockchain technology. After bitcoin, almost all the cryptocurrencies developed to date are based on blockchain.
When someone requests or initiates a bitcoin transaction, the transaction is broadcasted to a peer-to-peer network that consists of a huge number of computers, also referred to as nodes. The network of the computer first validates the transactions and the status of the user using mathematical algorithms. Once the transaction gets verified, it gets combined with all other transactions and is gathered into a new block. The new block of data is then associated with other blocks in the blockchain, making the blocks unalterable. Once this process is completed, a transaction gets completed.
Blockchain has multiple potential applications beyond cryptocurrencies and bitcoin. For example, businesses are shifting to using blockchain to improve their software and ability of the business. In addition, blockchain offers high returns on investment as compared to traditional investments.
Competition between Bitcoin and Cryptocurrency
Bitcoin is the first cryptocurrency that was developed in the crypto space, and it has a head start over all other technologies. After bitcoin, there are a whole lot of cryptocurrencies that have been developed, and each one has specialization in different sectors. The major thing between bitcoin and other cryptocurrencies is competition. There’s heavy competition, and cryptocurrencies are continuously working on improving their transaction time and security and the technologies that are used in the entire work. Cryptocurrencies are definitely making a lot of innovations and improvements regarding performance and safety measures.
In comparison to all other cryptocurrencies, bitcoin’s market share is huge in each sector. But with the inception of more new technologies, innovations and sophisticated technologies, the difference between bitcoin and cryptocurrency is diminishing with each passing day. The crypto analysts expect that soon the market will be more discrete with more cryptocurrencies that provide the best value and returns. The ones that will offer more value and returns will always stay on top. All the cryptocurrencies work differently, but all are based on blockchain. So before you step into the deep world of cryptocurrencies, you must first acquire knowledge on the basics and working of blockchain.
