To understand the difference between blockchain and cryptocurrency, it is important to review distributed P2P networks. Blockchain represents a chain or a network of blocks containing information in terms of data. In simple terms, blockchain is a system to record information. Before getting into details, it is crucial to note the difference between traditional ways to store the information, as compared to using blockchain technology. Traditionally, the data is stored in a database that can be accessed by users and the central agency that manages the database as an administrator.
The user or the client can perform various operations on the data in the form of CRUD, that is, Create, Read, Update, and, Delete. As it is obvious from their names, by performing one or more of these operations, the user can create additional data, read existing data, update existing data, or delete existing data.
In traditional database systems, the client’s access is managed by a central agency, which comes with a huge risk of security, wherein in case of any lapses or hacks, the entire database can be compromised as existing information can be altered or deleted. In contrast, when it comes to blockchain technology, the user can only add new information in the form of blocks.
Also, there is no single central administrator in case of blockchain, and it is managed by various nodes in decentralized manner, thereby adding more security and transparency. In other words, all the data stored in blockchain exists permanently and it cannot be removed or deleted. Therefore, as compared to CRUD operations, in case of blockchain technology, only two operations are possible, which are READ and WRITE. The READ operation includes queries to retrieve data from the blockchain, whereas the WRITE operation includes queries to add more data to the blockchain. To conclude the definition of blockchain, it can be said that blockchain is system of recording information that makes it impossible to hack or cheat or steal the information.
Blockchain as Distributed P2P Network
A p2p network or a peer-to-peer network implies a system consisting of multiple devices or nodes. This system provides a communication mechanism that is decentralized, wherein no single device or node controls the system. Therefore, there is no central server or administrator. In contrast, all the devices or nodes that are part of the network control and manage the entire system collectively. Hence, all the nodes have equal power to use and manage the system, thereby making the overall operations more secure and transparent.
As far as types of p2p architecture models are concerned, it can be structured, unstructured, or hybrid. In structured systems, all the nodes are organized and connections between these nodes are well defined, whereas in case of unstructured nodes, the connection between the nodes are formed randomly, and hence unstructured ones are inefficient.
In case of hybrid networks, overall performance is improved as connections are formed as a combination of structured and unstructured systems. P2P networks provide the foundation of decentralized mechanism, and hence, blockchain technology is implemented using distributed P2P networks to provide a distributed ledger of information or data for various blockchain applications.
Blockchain vs Cryptocurrency
In simple terms, cryptocurrency provides a digital medium of monetary exchange that is based on encryption technique.In comparison, Blockchain is the technology that powers cryptocurrency as a peer-to-peer decentralized distributed ledger system. In use, the ownership and transfer of various types of cryptocurrency is facilitated by employing the blockchain technology.
Types of Blockchain
There are 4 main types of blockchain networks, including, public, private, consortium, and hybrid. Many businesses have switched to using Blockchains as a technology platform to streamline business operations. But what is Blockchain technology and how does it impact business operations? Is it a disruptive technology that will completely change the way business is done? Or, is it just another technology platform that can be used by many organizations? In this article you will learn what Blockchains are and how they can benefit organizations.
Blockchain technology is quickly evolving and growing world wide. Major corporations and even small countries are switching to public, private, hybrid, and permissioned blockchains for improved traceability, accountability, and security. Explore the different types of public, private and hybrid block chains currently available today. Compare the advantages and disadvantages of each one.
Public and private Blockchains differ in a few ways. A public blockchain is open to all users but can’t be edited or modified, whereas a private one is private and limited to a certain group of individuals or businesses. Hybrid Blockchains work well because they combine the best aspects of both private and public Blockchains. With this combination comes the ability to secure the privacy and transactions of private Blockchains while leveraging on the transaction power of the public Blockchains. Another advantage of a hybrid blockchain is that it is fast and efficient, but it lacks the speed and fluidity of a private network. Learn more about the advantages and disadvantages of the different types of public and private Blockchains.
Although it comes with various risks, the benefits of using blockchain technology can outweigh the risks for different types of business models. Primarily, blockchain can provide exclusivity wherein only members have the permission to access the ledger, that too with permissions. As explained earlier, the benefits associated with security and transparency, along with the decentralized nature of the technology, provide significant benefits to all the stakeholders for developing blockchain based business models.
Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.
Quoted in and contributed to 50+ national & international publications (Bloomberg, FirstPost, SwissInfo, Outlook Money, Yahoo News, Times of India, Economic Times, Business Standard, Quartz, Global Legal Post, International Bar Association, LawAsia, BioSpectrum Asia, Digital News Asia, e27, Leaders Speak, Entrepreneur India, VCCircle, AutoTech).
Regularly invited to speak at international & national platforms (conferences, TV channels, seminars, corporate trainings, government workshops) on technology, patents, business strategy, legal developments, leadership & management.