Cryptocurrencies are a form of digital currency. Such as: Bitcoin, Ethereum, Litecoin and Tether. Cryptocurrencies are called coins or tokens. Blockchain is a distributed point -to -point database with strict data adding rules. Each cryptocurrency is associated with a blockchain as its open classification. So do all cryptocurrencies use blockchain technology?

What is blockchain technology?

Blockchain network is a revolutionary new network that can achieve decentralization. With the help of blockchain, websites or applications can be performed on many different servers -each server is independent and operated, so no individual or company cannot maintain a complete control of the entire network. Thanks to the blockchain, the new Web3 mode is realized.

The core of the blockchain consists of many separate computers or servers. Although these computers or servers are remotely distributed around the world, they jointly maintain a data sharing record. This sharing record is usually called "classification account", and its functions are very similar to the traditional classification accounts used in accounting. The data on these shared classification accounts can be any content, but the most common is cryptocurrency transaction records (the details will be introduced later).

The data is combined into a "block", and it is stringed in order like a chain (interlocking). The new data block will be attached to the end of the blockchain after processing. Each data block is crucial to ensuring the integrity of the entire blockchain -if a data block is "broken", the entire blockchain will be destroyed.

After combining a set of transactions into a block, all these data are treated with an encryption method called "hash", and each input (transaction) corresponds to a unique output (transaction ID hash). This transaction ID hash is a hexadecimal value (only 0-9 or A-F), and people can use it to verify that any given block is valid. If someone tries to manipulate the minimum transaction data of a block or adds a false transaction, the transaction ID hash of the block will also change, other network participants will find this, and then the entire block will be rejected.

What is cryptocurrency?

Cryptocurrency is a digital payment system that does not rely on bank verification transactions. This is a point -to -point system that allows anyone to send and receive payment anywhere.

Cryptocurrencies are not carried and exchange physical currencies in the real world, but the digital entries that are purely used as online databases describing specific transactions. When you transfer cryptocurrency funds, the transaction is recorded in public classification accounts. The cryptocurrency is then stored in a digital wallet. It is not a physical currency.

Cryptocurrency is named because it uses encryption to verify transactions. This means that advanced encoding involves storage and transmission cryptocurrency data between wallets and public classification accounts. The purpose of encryption is to provide security and security.

The first known cryptocurrency was Bitcoin. It was founded in 2009 and is still the most famous. Most of the interests of cryptocurrencies are traded for profit. As the adventurer strives to promote the rise in prices to maximize its potential profits, prices may soar from time to time.

Similarity between blockchain and cryptocurrencies

Intangible: blockchain and cryptocurrencies are invisible.

"Cryptocurrency" is an invisible digital tokens, and you can't hold it in your hand like 50 yuan. The "blockchain" for storing cryptocurrencies is not like a general centralized database. It does not exist in a place or a physical data center.

Advanced: blockchain and cryptocurrencies are technological progress.

Blockchain is the underlying technology behind cryptocurrencies. Blockchain is more advanced and safer than traditional databases. Cryptocurrencies are also technically more advanced than physical or paper currencies.

Interdependence

The emergence of blockchain is to record the world's first cryptocurrency "Bitcoin" transaction. All major cryptocurrencies are used to record the blockchain of transactions. If someone purchases a new Bitcoin, it will be recorded in all the blockchain of Bitcoin.

Difference between blockchain and cryptocurrencies

Different nature

Blockchain is a storage technology for saving data on a decentralized network. Cryptocurrencies are a medium like US dollar. Blockchain can be used to store different types of information other than cryptocurrency transaction records.

Monetary value

All cryptocurrencies have currency value. You must have heard that Bitcoin reaches $ 65,000 (about 48 LAC rupees) or Ethereum reaches $ 4,000 (about 3 LAC rupees). The blockchain does not have any currency value.

Usage

The use of blockchain technology exceeds cryptocurrencies. Blockchain can be used to record transactions of banks, healthcare, supply chains and retail. Cryptocurrencies are digital currencies, which can be used to buy goods and services and invest in.

Fluidity

Blockchain technology is decentralized and distributed around the world. No position can store all records of the blockchain. Although cryptocurrencies are stored in the blockchain, they can be accessed by mobile wallets. If you have a Bitcoin wallet, you can use it anywhere to trade with all parties receiving Bitcoin.

Transparency

Blockchain, as a public ledger, is highly transparent. Anyone can join the blockchain network and view available information. On the other hand, cryptocurrencies provide anonymous. Therefore, although anyone can see the source/destination of Bitcoin transactions, no one knows who the person behind the transaction is.

Do all cryptocurrencies use the blockchain technology?

Cryptocurrencies and blockchain technology are usually regarded as the same thing. This makes cryptocurrencies without the underlying blockchain technology. But is this really the case?

According to the definition of cryptocurrencies, the answer is negative. The definition of any cryptocurrency is to ensure security through cryptography. In addition, cryptocurrencies are not issued by central institutions, such as banks. Theoretically, this makes them avoid government intervention or manipulation.

Cryptocurrencies are the pioneers of blockchain technology. Although the blockchain phase has many advantages in the traditional centralized banking system, some people think that there are defects in some aspects of blockchain technology, including scalability issues, slow block creation time, mining costs and double flower attacks Essence.

Cryptocurrency essentials without blockchain technology

Not all cryptocurrencies are based on blockchain.

These include iOTA, Nano, byteball, etc.

They are based on the direction without a loop or DAG.

DAG promises to eliminate mining costs and speed up transaction speed.

DAG is expected to solve the problem of expansion.

DAG is easily attacked by certain types.

The dawn of DAGs

As early as 2009, Bitcoin was the first cryptocurrency. But it is not just cryptocurrencies that arouse this international interest. Many people think that more important innovation is Bitcoin's underlying blockchain technology. Introducing decentralized point -to -point blockchain, this technology is popular all over the world. Over the past few years, the blockchain classification account is the decisive characteristics of any cryptocurrency. But with the official release of IoTA, all of them have changed.

IoTA replaced the traditional blockchain -based distributed ledger with so -called so -called DAG. The IoTA protocol uses DAG -based consensus algorithm, and the IoTA team calls it tangle. Although it is still under development, Tangle eventually intends to work as a distributed ledger similar to blockchain, it has a unique turning point. Traders must confirm the two random previous transactions. Each of these two will verify the other two transactions before. The final result is not that the transaction is grouped into the block and stored in the blockchain. Instead, it is a series of entanglement alone.

After the launch of IoTA, many non -blockchain protocols followed. However, most of them invented their consensus algorithms to protect the network from double -flower attacks. In addition to IOTA, protocols using DAG also include Nano and Byteball.

Each of them put different consensus algorithms into practice. NANO, formerly known as RAIBLOCKS, implemented the so-called Block-Lattice. With Block-Lattice, each user has its own chain, only they can write it. In addition, everyone holds a copy of the chain. Each transaction is decomposed into the sending block on the sender and the receiving block on the receiver chain. The problem of Block-Lattice is that it is easily attacked by spending money. These involve the number of chains that must be tracked by sending insignificant cryptocurrencies to the empty wallet.

DAG and Blockchain

Some people regard DAG as an alternative to overcome the shortcomings of blockchain technology, but claiming that one technology is better than another technology. In the world of cryptocurrencies, people often try to speculate on the technology they invest. This has led to the emergence of buzzwords such as "blockchain killer", which is intended to depict DAG as technology better than blockchain.

Although the DAG network does perform better than blockchain in some ways, considering the advantages and disadvantages of the two is crucial.

Advantages of DAGs

The main advantages of the DAG network are related to mining. Because there is no mining, there is no mining fee related to DAG transactions. Seeing how to decline in block rewards, mining fees will inevitably rise to motivate miners to continue mining. In this regard, a system that completely eliminates mining fees looks promising.

No mining also means better delay, which can verify and handle transactions in the network faster. Once the node receives the transaction, it can immediately confirm it without waiting for the formation of new blocks. This may not be so prominent compared to blockchain (such as Ethereum or Litecoin) with fast or medium outlet time. But compared with Bitcoin and Bitcoin cash, the difference in time is more obvious.

Disadvantages of DAGs

The existing DAG network is facing security issues due to its current network scale. In order to prevent double -flower attacks before network growth, each DAG proposed its own solution. IOTA's tangle -although it aims to become faster with the growth of the network -currently depends on a single coordinator node, also known as an authoritative proof node.

Another DAG network Byteball relies on 12 so -called witness nodes running the main chain. These witness nodes are controlled by developers to check the state of DAG. Although IoTA and byteball claims their solutions are temporary, they have problems in terms of centralization, because in a sense, they are operated by central institutions.

Trading DAG-based cryptocurrencies

At present, not all DAG -based cryptocurrencies can be purchased with legal currencies such as the euro and the US dollar. Most exchanges that support these currencies allow you to buy them with other cryptocurrencies (such as Bitcoin or Ethereum). If you do not have cryptocurrencies, you must first buy some of the exchanges that allow you to use daily funds to purchase cryptocurrencies through the number of daily funds.

The above content introduces the relationship between blockchain technology and cryptocurrencies. Not all cryptocurrencies use blockchain technology. Cryptocurrencies are the most attractive is to be able to efficiently transfer payment on cross -border transfer, with almost no or cost, delay or foreign exchange fluctuations. In the near future, cryptocurrencies will be generally accepted.