I must commend crypto for making me understand the term “blockchain technology,” but I have been thinking out loud; Outside Cryptocurrency, can blockchain technology stand?
This question is straightforward since we know that cryptocurrencies are nothing without blockchain technology, but is that the same for blockchain technology?
Even if blockchain existed years before it birthed cryptocurrencies, we can’t forget that we knew blockchain because of crypto, especially Bitcoin.
Personally, for me, it was delving into the underlying technology behind Cryptocurrency that made me understand how blockchain technology works.
So, without further ado, this article will make us understand blockchain technology away from Cryptocurrency and vice versa.
Relationship between Blockchain and Crypto
Blockchain is the underlying technology behind cryptocurrencies.
As previously discussed, blockchain is the distributed ledger that records and verifies crypto transactions.
Simply put, blockchain is the decentralized bank of cryptocurrencies.
With this, without the blockchain, crypto is nothing and worthless.
So, what about blockchain without crypto?
Just a quick guess?
Okay, let’s move on.
Blockchain without Cryptocurrency
Blockchain without crypto is still a force to reckon with in the tech world.
Blockchain outside crypto is still a distributed ledger that stores different data.
At this point, it doesn’t store crypto-related data, but it stores data of other assets like NFTs, supply chain initiatives, metaverse, etc.
Blockchain technology can still keep track of the status of shared databases across multiple users.
Now that we have answered the question, we can also say that blockchain outside crypto is still valued and remains a significant technological innovation.
However, how can a blockchain run without crypto?
And if we must need crypto to run a blockchain, then we were wrong in the first instance.
Let’s see how it goes.
What runs a blockchain?
Taking crypto, for example, miners run the blockchain system by solving complex mathematical puzzles in the nodes(POW consensus mechanism).
But before rushing to say that crypto runs all blockchains, we have to know the several available blockchain types;
Public and Private blockchains.
Public blockchain
From the name “public,” this blockchain is accessible to different people.
Public blockchains are also called permissionless blockchains.
That means anyone can participate in the network.
A typical example of a permissionless blockchain is the crypto blockchain, where people participate in the blockchain and earn incentives.
For instance, if you want to start mining Bitcoin(validating Bitcoin transactions), you don’t need the permission of anyone, just your PC and mining rings.
The people who participate in a public blockchain are called miners.
As said earlier, miners solve complex mathematical puzzles while earning rewards.
Finally, we need crypto to run any public blockchain.
Private blockchain
Private blockchains are centralized, and you need an invitation before participating in the network.
Unlike the public blockchain, this blockchain runs through a particular organization.
For instance, Hyperledger and Corda are renowned private blockchains.
Hyperledger, created by the Linus foundation, utilizes private blockchains to support confidential commercial transactions.
Corda is another private blockchain used by companies that wish to develop interoperable distributed networks with private transactions.
Finally, we don’t need crypto to run any private blockchain.
Sustainability of Blockchain
For a blockchain to run smoothly, there should be some consensus to be met in the network.
However, it depends on the particular blockchain type.
For public blockchains, the number of people participating in the chain accounts for the sustainability of the blockchain.
Since miners are always in the blockchain line, it becomes difficult to hack the protocol.
Also, since everyone can participate in the network, there can be no room for dominance by fraudulent ones.
For a private blockchain, sustainability is accounted for by the transparency of the owner.
Since it is centralized, only accepted persons can participate, and later on, the owner can kick people out.
So, the security is valid, but transparency remains a problem.
My opinion
Having a private blockchain depends on the task to be carried out.
For instance, you can create a private blockchain to track the records of the production circle of goods in your firm.
This circle covers production to distribution.
As such, only the workers involved will have access to participate in the system.
However, if you want a payment system that will be acceptable to the public, you can’t use a private blockchain.
Therefore, your blockchain choice depends on the following factors;
- Decentralization.
- Security.
- Transparency, and
- Scalability.
Decentralization
There is a misconception about decentralization. Many people believe that any decentralized project should have no owner.
That is wrong. Decentralization is a shift of governance from a central body to separate entities where other people can influence organizational operations.
With this, if decentralization is a necessity, a public blockchain is the best option.
Security
The security of any blockchain depends on how immutable data remains in the network.
As for the private blockchain, security depends on who owns the network since they control the system.
The security of any public blockchain depends on the participants of the blockchain nodes.
Transparency
Transparency has become a challenge in the world today.
For an organization to have transparency, transactions and operations should be verifiable and accessible to clients.
If you want to achieve transparency in your organization, you have to use a public blockchain.
Scalability
Scalability tells how fast and flexible a blockchain is. It also shows the ability of a blockchain to withstand loading.
Any blockchain that wants to last longer should be scalable to avoid degradation.
Private blockchains are more scalable than public blockchains.
However, with layer 2 scaling solutions, the scalability of public blockchains is better improved.
Conclusion
Blockchain technology remains a force to reckon with in the world at large.
Blockchain, however, replaces business models that rely on third parties or centralization.