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B2BB: Back To the Blockchain Basics

B2BB: Back To the Blockchain Basics
Vasilis Taxiaris 06 September 2018

There is a great confusion between Blockchain and cryptocurrencies.

Many think that Blockchain technology and cryptos are the same thing. Well, technically cryptos are based on Blockchain technology and they need it to function properly but Blockchain technology has many more applications. Let’s start from the basics first.

 What is Blockchain, how does it function and why it is needed?

To begin with, Blockchain technology is based on a decentralized system, and even more specifically on a Peer-to-Peer network which is a type of a decentralized system.

So, what is a P2P network?

P2P networks consist of a number of independent computers that cooperate with one another by using a communication medium in order to achieve a specific objective without having any centralized element of control or coordination. Blockchain technology records transactions, both financial and non-financial (basically everything of value) in a digital ledger. In other words, P2P systems allow users to interact directly with one another instead of interacting indirectly through middlemen, which increases processing speed and reduces costs.

Yet, why is Blockchain technology needed? Integrity and trust are major concerns of peer-to-peer systems, such as technical failures and malicious peers. Therefore, the core problem to be solved by the blockchain is achieving and maintaining integrity in a purely distributed peer-to-peer system that is comprised of an unknown number of peers with unknown reliability and trustworthiness.

How about cryptocurrencies?

So, now that we know the basics about the technology behind cryptocurrencies it's about time that we learn a few facts about cryptocurrencies themselves. First of all, a cryptocurrency is a digital currency secured by the use of strong cryptography and is used as a medium of exchange. The first crypto ever created dates back to 2009, when the Japanese developer(s) Satoshi Nakamoto came up with Bitcoin.

Nevertheless, there are people doubting cryptocurrencies, which leads to the question of “Why buy cryptocurrencies?”. The main advantage lies in the fact that cryptos use Blockchain technology, which in turn means a decentralized system. Thus, transactions are much quicker as there is no need for bank interference. Apart from that, as noted previously, Blockchain technology improves the security of crypto transactions, rendering them very secure and safe.

Those are the necessary facts about cryptocurrencies and Blockchain technology that everyone needs to know, especially since many think that Blockchain and cryptocurrencies are the same thing. Even though cryptos require Blockchain technology to function, Blockchain technology can have many more applications in real life.

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