Understanding the difference between Blockchain and Cryptocurrency
One of the biggest misconceptions amongst investors is that Blockchain and Cryptocurrency are the same thing. This fallacy is prevalent across the world but in most cases, the two are related but markedly different in their value, application and investment propositions.
What is blockchain?
Blockchain technology is a decentralized digital database of information which is both cryptographically and chronologically stamped. Decentralization means that there is no governing body of authority. Both these aspects allow all transactions which occur in the blockchain to be immutable, fully transparent and trustless.
Being decentralised, the underlying rules of blockchain cannot be changed.
Key benefits of blockchain’s decentralised properties are the ability for transactions to be purely peer-to-peer, for anyone with access to the internet to access any protocols built on the blockchain, and the fact that no single central body of authority is able to alter their properties purely at their own discretion.
Due to the increasingly heavy spotlight on cryptocurrencies such as Bitcoin and the first application of blockchain technology being purely for peer-to-peer transactions, it is common for cryptocurrency and blockchain to be bundled together. However, blockchain technology's potential is not limited to cryptocurrencies.
How does cryptocurrency differ from blockchain?
Cryptocurrencies are decentralized digital assets which use blockchain technology to operate. For example, Bitcoin, which is the cryptocurrency with the largest market capitalization (at the time of writing), can be traded without the aid of a third-party such as a bank. This not only prevents the long time period taken for third-parties to verify, approve, and transfer transactions but also decreases the overall costs, making the transactional process incredibly more effective and efficient.
Unlike most currencies we use in our everyday lives, there is a limited amount of individual tokens in a cryptocurrency. For example, since fiat currencies have gone off the gold standard, centralized bodies of authorities such as the FED are able to greatly increase the supply of the currency they are in control of, causing dangerous effects such as inflation. In comparison, Bitcoin, the most popular cryptocurrency, has a maximum supply of 21 million coins. The maximum supply of Bitcoin is encrypted, and therefore no one is able to increase it (and in contrast make it inherless valuable). This inability to just ‘print more’ is a pivotal element of cryptocurrency which facilitates its value.
While Bitcoin is the world’s most popular cryptocurrency, it is just one of thousands.
Many cryptocurrencies have other tangible utilities beyond their digital asset, which are powered by smart contracts - a blockchain protocol which can automatically launch new transactions once the smart contract triggers have been activated.
Understanding the relationship between blockchain and crypto
Blockchain can exist without cryptocurrencies but crypto cannot exist without blockchain.
It’s why Blockmate Ventures identifies and incubates blockchain projects which utilize the principles of blockchain, rather than cryptocurrency projects.
Hivello, for example, is a blockchain business that applies blockchain technology to the Internet-of-Things (IoT) industry via the Helium blockchain network.
Without any upfront cost or engineering knowledge, a user can simply use connect their internet to the Helium blockchain network and earn HNT tokens or cash for contributing to the network. It follows the same process as a homeowner renting out their spare room for income via AirBnB.
In the case of Hivello, smart contracts are triggered when a homeowner’s internet is engaged by an IoT device, releasing HNT to the digital wallet linked to that hotspot as a means for earning passive income.
The Helium network meanwhile provides internet connectivity to IoT devices independent of cellular network carriers and with lower power consumption.
Why Blockmate (TSX.V: MATE) incubates in blockchain projects
Blockmate Ventures is a Web3 incubator/venture creator focussing on businesses that utilise blockchain technology and decentralization to provide greater utility, accessibility and sustainability around everyday services. Working with prospective Founders, projects in incubation can benefit from the Blockmate ecosystem that offers tech, services, integrations, digital assets, and advisory to accelerate the incubation of projects towards monetization.
Led by blockchain experts that were also early-stage Bitcoin adopters, the leadership team at Blockmate Ventures have successfully founded successful tech companies from the Dotcom era through to the social media era and view Web3 technology as the vehicle for a democratised future.
Many of these ventures have exposure to cryptocurrency but are primarily driven by their utility and application of blockchain technology’s distributed database, smart contracts, transaction speed, transparency and authentication functionalities.