When you think about blockchain, you usually think about cryptocurrencies. But blockchain itself is a technology and is not an asset; it is a way to store records such as transactions. So it would be really wrong to say that blockchain is crypto currency. Cryptocurrency is, however, most of the blockchain technology since it utilizes most out of it.
Here is my take to it
To start, we can look at a trend for Bitcoin and Ethereum: the most well-known cryptocurrencies.
You can see there were huge spikes in interest for both Ethereum and Bitcoin while Bitcoin might be much more ubiquitous. This just gives you a basic idea of how impactful cryptocurrencies can really be. They are used more frequently than you might think.
Simply put, it is data blocked and chained. Blocks of new data are added and chained to the old line of data, and eventually, this forms a huge chain of records/data. It is important that blocks have a capacity because if you keep adding data into a single block, what is the purpose of having chained blocks? You might as well have a single database with one block instead. So blocks are added if and only if an existing block reached its capacity and is ready to be chained to preexisting blocks.
You might start with the first block and try to fill it in with data generated any second, and once all records are in for the amount a single block can hold, you send it along and that chunk of data is immutable and permanent and wait for the next chunk of data to be recorded.
What you are getting from such a system for recording is having every single record that ever came in with the attribute that past records cannot be altered since it is a part of the chain. It also makes it easy to be decentralized and free.
So much about how a blockchain works, the place where it really shines is in cryptocurrency.
How does it relate: Bitcoin, Cryptocurrency
Bitcoin is really both an asset(currency) and a system. It runs like any other currency but with bonuses, and that is why it has gotten so much attention across the years.
And it utilizes
If you ask where Bitcoin is (either as an organization or a currency): it is everywhere and it consists of all the individuals within it. They are all in the same boat.
Here are a few special things about Bitcoin:
- It is a complete network, many miners(nodes/sites that are set-upped by individuals) maintain it across the globe
- Not governed by any single organization(e.g. the government)
Cryptocurrencies don't require paper and they can be anywhere. Anywhere a miner sets up their station, they are a part of the network. It's more like an entity that floats above all currencies.
- Everyone can see the transactions
- But you are safe
We talked about how blockchain operates but the way that cryptocurrencies really utilize a blockchain is using it for storing transaction records. And as we know from how a blockchain operates, it will store the transaction records in the chain and retain them being both immutable and permanent.
You can actually see a full copy of all transactions here
here is an example screenshot:
- Individuals with transactions can only add on to the blockchain thus they cannot change any existing transactions.
- Transactions cannot be undone, so transfers are fraud-free. This is done by having a copy of transactions in every single node.
A hacker can try to alter existing or adding nonexistent transactions in the past and he would get these results: for the first case, all the nodes aka the whole Bitcoin network will verify the information the hacker tries to alter and it will be soon corrected either for a single node or multiple nodes that have been hacked. The second case would not be possible at all since all records are in blocks and if the hacker attempts to add information to a block they will have to move and change all existing records.
A Super Brief History on Cryptocurrencies
- David Chaum had the original idea of a cryptocurrency in 1983
- The most well known and decentralized cryptocurrency Bitcoin was created by Satoshi Nakamoto in 2009
To say that a currency is a commodity is no really close, but cryptocurrencies can be an exception I guess.
- There are no restrictions for blockchain-powered cryptocurrencies
- It is a currency that is safe, anonymous, secure, and flexible
- It is very young
- It is a mixture of globalization, technology(especially computationally), and geniuses.