Does Blockchain Need Cryptocurrency?
The word “blockchain” often ensues the idea of cryptocurrency in the minds of many people because it has been largely believed that Bitcoin(BTC) is the main application used on a decentralized ledger or a blockchain but on the contrary, there are alternative uses of the blockchain which are very far from cryptocurrency.
Blockchain plays a huge role in the finance industry for some financial services like online payments, digital assets, remittances and so on because it makes transactions decentralized, eliminating the need for middlemen or banks.
Aside from the finance industry, the other applications where the blockchain has taken its toll are smart contracts, reputation systems, the Internet of Things(IoT), public services and security services.
A blockchain without cryptocurrency is a distributed ledger that tracks all the status of a shared database across numerous users.
Hence, it is important to understand that the relevance of blockchain technology is not only tied to cryptocurrency alone but also to the decentralized storage of information and the consensus of a particular digital asset which may or may not be cryptocurrencies.
So, in this article, we will find out if blockchain truly needs cryptocurrency to function or not.
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Can Blockchain Be Used For Anything?
The idea of blockchain was propagated by Satoshi Nakamoto to solve the double spending problem associated with digital currencies. There are many ways in which the blockchain can be useful. Hence, we can say that blockchain can be used for almost everything today, ranging from gaming, banking, lending, gambling, tourism, voting, real estate and so on.
Let’s briefly take a look at some applications of blockchain technology.
Applications Of The Blockchain
Using blockchain for lending allows lenders to give loans based on smart contract collaterals.
Smart contracts are built on the blockchain and it allows for automatic execution of certain events like service payment, full repayment of loans, the release of collateral and margin call.
This makes loan processing a faster and cheaper deal, allowing lenders to offer better rates.
Again, smart contracts being used on the blockchain offer greater transparency in the insurance processes. There’s a need for a level of transparency to existing between the insured and the insurance company. The blockchain provides a good way of recording the data without risking the duplication of the same event by the customers.
Also, smart contracts in the blockchain can hasten the payment process for the claimants to receive payment.
3. Real Estate:
Real estate transactions require a lot of financial information and verification of ownership before the deeds and titles would be transferred to new owners.
Due to the delicate nature of the real estate transaction, involving blockchain technology in real estate transactions can give a more secure, faster, decentralised and available means of verifying and transferring ownership of properties.
Blockchain technology in the real estate sector will eliminate the need for large paperwork, speed up the transaction and help save money.
4. Secure Personal Information:
Do you know that personal information stored in blockchain technology is more secure than any other system?
The blockchain will secure some of your sensitive data such as your Bank Verification Number, and National Identification Number than some of the current systems which are more susceptible to cyber-attack.
Blockchain technology can be used to secure access to identifying information and at the same time, create access for those who need it in some industries.
5. Non-Fungible Tokens:
Non-fungible tokens, or NFTs, are digital arts which can never be replicated. NFTs, give the owner an exclusive right to own such a token alone.
However, the blockchain does not allow the duplicating of data, hence, creating or putting an NFT in a blockchain is a guarantee that a single copy of a piece of digital art exists. This can be seen as investing in physical art but without the difficulties of storage and maintenance.
Does A Blockchain Need Cryptocurrency To Work?
To be able to answer the question of whether a blockchain needs cryptocurrency to work, one should first understand the two main categories of blockchain.
A blockchain network can either be a public blockchain or a private blockchain.
A public blockchain is an open blockchain which does not require anyone to seek permission before joining and participating in the blockchain network.
A private blockchain lacks decentralization and can be joined or participated in based on invitation. The private blockchain is owned and controlled by a single organisation.
Public blockchains like the Bitcoin network rewards the participants (miners) for solving some complex mathematical equations and these rewards serve as a motivation to the whole system, helping it to reach a consensus. The reward comes in form of the network’s native token.
Comparatively, private blockchains such as Hyperledger and Corda which is aimed at companies who wish to develop an interoperable distributed network with private transactions. In this kind of blockchain, there is no requirement for cryptocurrencies to power and reward members on the network, since the corporations manage the blockchain.
Hence it is understandable that only the public blockchain requires cryptocurrencies to work while it is not necessary for the private blockchain.
Can I Invest In Blockchain Without Buying Cryptocurrencies
The blockchain network is an interesting subject with lots of opportunities for users and organisations to speed up transactions, improve security, streamline corporate procedures and use blockchain as a service
One way to invest in the blockchain without buying cryptocurrencies is to invest in companies Microsoft which offers bitcoin as a service(BaaS). That is to say that you can buy stocks of companies that have adopted blockchain solutions to help you gain indirect exposure to the blockchain without buying crypto.
One can also invest in the supply chain area where the blockchain has made a great impact.
For example, one can track a crop back to the farm it was grown using an unchangeable public record of every transaction.
The manufacturing, transportation and delivery of recycled items can be tracked back to the recycling station using the public blockchain and investing in these companies means indirect investment in the blockchain instead of investing in cryptocurrency.
In summary, the pool of opportunities in the blockchain is overflowing and as each day passes by, the applications of the blockchain in our daily lives become more realistic.
It is not necessary that you must own cryptocurrency before you can tap into the blessing of the blockchain. The article has shown that you can invest in companies that have adopted the use of blockchain in any form and indirectly be a part of this great technology.