Words like cryptocurrency, blockchain, and Bitcoin are
often used interchangeably, but in fact, there are some differences between
them. Nowadays, it’s hard not to notice the hype around statements about how
cryptocurrency and blockchain technology can change everything (or at least do
a lot). However, it is surprising that many people still do not understand what
is happening. One of the main causes of confusion is that everyone talks about
different things.
Representatives of the communities of all three
components of the blockchain technology share a basic set of design principles
and technological foundations, but in general, their goals and prospects are
almost completely different from each other.
There is a cryptocurrency - the idea that networks can
safely transfer digital assets without central control points. There is a
blockchain — the technology that implies that networks can achieve a consensus
on information across established boundaries of trust. And there is
cryptanalysis - the idea that virtual currencies can play the role of tradable
assets.
The first is a truly revolutionary concept, but it still
does not know that the revolution will be successful. The second and third are
innovations that change the game and are capable of significant evolution.
Cryptocurrencies
Cryptocurrency is the technology that most people have
heard of. Learning the details of mining or the internal structure is not the
easiest way to understand it. Instead, it is better to focus on decentralizing
trust.
Many actions require trust. Without trust, a draft law worth
several million dollars is just a piece of paper, and voting in elections is a
meaningless ritual. Traditionally, the word “trust” refers to the dependence on
partners, institutions or intermediaries. People, governments, and companies we
trust may be unreliable for a number of reasons. Bitcoin has shown that you can
create something valuable (for example, money) that you can trust without
having to trust a particular person or organization, in particular in terms of
verifying transactions.
This idea, if it is fully implemented, can change
society. The world can get governments that represent the interest of their
citizens, companies that represent the will of the parties interested in their
development, and the Internet free from censorship and outside influence. This
can put an end to fake news and the mass automation of daily life to improve
the living standards of mankind. Or, at least, people can get solutions that
significantly improve their status quo. Decentralization carries value in any
form, regardless of the method.
• Profit
What is true for small groups, limited applications, and
"special" users may not necessarily become mainstream. Until Facebook
appeared, it was unclear who and how could make real money on social networks,
which were originally a place for simple communication between teenagers and
young people. However, the fact that Facebook appeared does not prove that it
was inevitable.
Some of the bets on the cryptocurrency revolution can be
proved correct. These bets have a wide potential for growth, but in reality,
it’s still just a game. In reality, real revolutions happen less frequently.
And when this happens, it happens with serious collateral damage.
Blockchain
Blockchain has common roots with cryptocurrencies, but
its goal is completely different. Instead of trying to do without trust, the
blockchain technology seeks to unduly limit trust. We really trust ourselves or
our own organization. But no one person or company is an island in the ocean.
But even island states are forced to interact with other members of the world
through the water.
Processes are important in the world especially among
governments and large companies, where good can be tracked from one place to
another. Firms spend about $10 trillion annually on “logistics”, which reduces
transportation costs through systems handled by some people. Retailers,
distributors, and manufacturers store their own reliable (but independent)
records of flow data through supply chains.
You go to a new hospital or visit a new doctor, you do
not have all your medical records in the absence of a single base. All such
flaws in the flow of information are a kind of transaction costs. According to
today's dominant school of economics, efforts to eradicate this problem are an
important driving force in the economy.
A good percentage of the transaction costs within and
between firms occur as a result of the limited elasticity of trust. If each
side of the transaction trusts the information involved, even if they do not
trust each other, the costs may decrease, and the productivity will change
dramatically. This is the essence of the vision of the blockchain development.
Many well-known companies are already involved in all the
processes of unit tests and consortia because they see huge potential in
blockchain development. Decentralization, in this case, has a different vision
and is not just a basic requirement, as is the case with cryptocurrencies.
Blockchain development will help to eliminate some of the errors that humans
are prone to and saves time.
Cryptanalysis
This term refers to the analysis of digital tokens
transformed into trading tools. The potential scale of this direction is huge.
The volume of markets reaches trillions of dollars, which cannot be called
unusual in the modern financial sector. At the same time, they are not viewed
as a way to facilitate actions without centralized trust, but as a new class of
investment assets. Since they are initially digital, they can theoretically
trade more efficiently than existing tools. At their core, they are more
flexible and global.
Author Bio:
Melissa Crooks is Content Writer who writes for Hyperlink
InfoSystem, a mobile app
development company in New York, USA and India that holds the best team of
skilled and expert app developers. She is a versatile tech writer and loves
exploring latest technology trends, entrepreneur and startup column. She also
writes for top app development
companies.
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