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Bitcoin, cryptocurrency, blockchain… So what does it all mean?
Let’s start with some quick definitions. Blockchain is the technology that enables the existence of cryptocurrency (among other things). Bitcoin is the name of the most recognized cryptocurrency, the one for which blockchain technology, as we currently know it, was created. A cryptocurrency is a medium of exchange such as the US dollar, but is digital and uses cryptographic techniques and its protocol to verify the transfer of funds and control the creation of monetary units.
What is blockchain technology?
A blockchain is a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include enterprise blockchain applications, sustainability, tokenization, fund transfers, supply chain tracking and many other areas.
What is cryptocurrency?
Cryptocurrency is a medium of exchange, created and stored electronically on the blockchain, using cryptographic techniques to verify the transfer of funds and an algorithm to control the creation of monetary units. Bitcoin is the best known example.
- Has no intrinsic value in that it is not redeemable for another commodity, such as gold.
- Has no physical form and exists only in the network.
- Its supply is determined by the protocol, not a central bank and the network is completely decentralized.
Blockchain also has potential applications beyond digital assets, such as bitcoin and cryptocurrency
From a business perspective, it’s helpful to think of blockchain technology as a type of next-generation business process improvement software. Collaborative technology, such as blockchain, proclaims the ability to improve the business processes that occur between companies, radically lowering the “cost of trust.” For this reason, it may offer significantly higher returns for each investment dollar spent than most traditional internal investments.
For an overview of digital assets, which include cryptocurrencies, start with Demystifying cryptocurrency and digital assets. We provide an introduction into the mechanics of the digital asset world, how it functions, the various categories of assets, and where the future of this space could lead.