BLOCKCHAIN:
Its relationship with Cryptocurrency and beyond
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ince its inception in 1983 by American cryptographer David Chaum, Cryptocurrency has been a major consideration in the world of technology and financial solu ons as the world began to make a move into a more digital existence. However it wasn’t un l 2009 following the inven on of the first decentralised Cryptocurrency- Bitcoin by Japanese developer Satoshi Nakamoto that society really began to understand the true power of the currency transfer that exists within Blockchain and its ability to take back financial power from the central systems and place it into the hands of the people. The issue remains, that even though it has long existed there is much confusion as to the rela onship between Cryptocurrency such as Bitcoin and the Blockchain system and the understanding of exactly what it means for not just the financial markets, but the world as well. By Ma hew Meehan Since its major explosion over the last decade as its u lisa on drove up its value, Cryptocurrency has been long debated as to what its total func on consists of. Despite this, it is best understood as a value of exchange just like any modern paper based currency such as the pound, yet instead of relying on a physical manifesta on it instead exists digitally through the benefits of being protected by secure, online encryption techniques that determine the control over the actual crea on of it and to also serve as verifica on of the fund transfers than can take place between accounts. Bitcoin is the main example of such and serves as the only current form of cryptocurrency to actually be
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transferrable in the modern markets, with some businesses both domes cally and in Europe allowing for it to be used as a general payment method that mirrors the tradi onal bank card. Blockchain was created primarily to facilitate the use and existence of Bitcoin as the technology behind it is responsible for the movement and transfer of payment. In essence, Blockchain is a decentralised ledger of all of the transac ons across a network that is classified as peer to peer and through this ability, all participants in the transac ons can confirm it without the need for a ‘middleman’ or central authority to clear the ac vity such as is the role of the modern banking system. Processes available through the use of blockchain include fund transfer, se ling trades, the process of secure vo ng and many other issues that simply require the u lisaon of a discreet pathway to complete some form of exchange. The relationship between them is clear: Cryptocurrency is simply the first form of Blockchain in the worlds existence, as Blockchain underpins the currency through its technological ability to become its own banking system or more specifically distributed ledger system which due to its digital advantages can also allow for the crea on of alterna ve offshoots to its tradi onal form, as the users also referred to as ‘miners’ can actually design an individual blockchain with one set of agreed parameters, whilst other users can change these rules in order to be er the nature of their transac ons or the interests of all involved par es. In order to use Blockchain for currency transfer all users must possess
their own individual ‘cryptographic key’, which is much like a standard password although it u lises a personal string of data in order to allow account holders access to their wallets of value within the defined system. Once a transaction is agreed, it must also be approved/authorised before it becomes a block in the chain and this when occurring in a more common ‘public’ chain will mean that the decision to approve
