Question

Examine the relationship between the cryptocurrencies and blockchain. Some guidelines:

 



Is the cryptocurrency enabling the blockchain or the other way round?

If the cryptocurrency enables the blockchain, what is the role of blockchain and why is the cryptocurrency important in enabling the blockchain?

If the blockchain enables the cryptocurrency, what are the characteristics of blockchain that enables the cryptocurrency to function as it is?

Answer 1

1.Cryptocurrency is a digital or virtual currency used as a medium of exchange, but not regulated by the central bank of a country. It uses encryption technology to regulate, generation of  units and verification of  transfer of funds.Most commanly known cryptocurrency is Bitcoin,

Blockchain is a chain of number of blocks containing information. It is a technology based on which the cryptocurrency was generated and is currently being operated. Thus Blockchain is enabling cryptocurrency.

The first cryptocurrency (Bitcoin) was devloped by Satoshi Nakamoto by adopting the blockchain technology.

2. Blockchain plays an important role in storage of information in encrypted format. The information of transaction is stored in various blocks in bits and parts and makes it difficult to tamper with them as all these blocks containing information are linked and interdependent to each other forming a giant network of information. Blockchain enables to maintain the privacy of the transactor and the amount of transaction that occurs between two parties.

Blockchain is enabler for cryptocurrency. Why? As mentioned before Cryptocurrency is a digital currency, meaning currency which is made available on digital platform. Blockchain technology is enabler for Cryptocurrency, because it enables movement of Cryptocurrency from seller to buyer on a digital platform.

I hope this answer clarifies all the doubts.