What Is Blockchain without Cryptocurrency?
While most people are aware of blockchain technology, only a few understand what it does and how it differs from cryptocurrency. Come read our blog to find out.
By now, almost everyone has heard of blockchain technology. However, not many people truly understand what it is. One of the most common mistakes is using the terms blockchain and cryptocurrency interchangeably. The truth is that cryptocurrency is only one of many uses for blockchain.
What Is Blockchain Technology?
Blockchain is a database technology. The main difference between blockchain and traditional database technology is that a blockchain does not require a centralized actor to function.
Here is an example: the Internet as we know it today mostly relies on centralized databases. If you send an e-mail to a recipient, you don't send it to the recipient directly. Instead, you send it to an e-mail server which then distributes it to the receiver. So e-mail is not a direct peer-to-peer communication system but a centralized system that relies on an intermediate.
However, blockchain is different. Blockchain creates a decentralized peer-to-peer system. It enables direct communication from the sender to the receiver without a centralized intermediate. That is only possible because the blockchain will ensure that no third party can manipulate or delete messages through encryption. The function currently performed by a centralized intermediary, namely ensuring the network's operation on a blockchain, is being replaced by encryption technology.
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What Is Cryptocurrency?
Cryptocurrency is the first and so far the most prominent application of blockchain technology. Whereas in the traditional money system, banks and central banks organize the money transfer, a cryptocurrency system is based on blockchain technology.
For example, if you send money to a recipient using a traditional bank account, it is not sent directly to the recipient. Instead, your bank deducts from your account, and the receiver deducts from the receiver's account. There has been no actual monetary exchange yet. This sort of money transfer needs banks as centralized and trusted intermediaries.
But in a blockchain-based cryptocurrency system, the blockchain ensures that the transfer is performed correctly by cryptographic encryption. As a blockchain records data in an immutable manner, meaning nobody can alter, manipulate, or delete transactions, a centralized actor like a bank is no longer needed.
Blockchain without Cryptocurrency
Blockchain has far more applications than just cryptocurrencies. A decentralized blockchain could theoretically replace any system that currently relies on a centralized intermediary.
Consider real estate transactions, which require a large number of intermediaries such as lawyers, brokers, or banks. The entire transaction could be automated on a blockchain with no intermediaries.
There are also benefits of blockchain in e-commerce. Today, an e-commerce transaction involves several parties, such as a buyer, a seller, an e-commerce platform, and banks. On a blockchain-based e-commerce platform, the buyer could directly interact with the seller while the blockchain network protects both parties.
Visit Export Portal
Another example is Export Portal's blockchain-based trade portal. Companies can use the platform to interact with each other directly. The blockchain ensures that all transactions such as money transfers, communications, or documentation are stored and transacted safely without involving any third-party actors. Check out the import-export website today!
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