Automotive Blockchain Part II: The Difference Between Blockchain and Cryptocurrency
Who really understands the implications of blockchain? Truth be told, not nearly as many as the industry will need in the near term. But progress waits for no man, and blockchain technology is exploding faster than most organizations know what to do about it. It is up to us visionaries to stay on the cutting edge.
The first thing we must clear up is the common misperception that cryptocurrency is blockchain. This is false. Blockchain and cryptocurrency serve two completely different purposes, albeit there are times when one is directly connected to the other. For starters, it’s important to understand that blockchain is the technology that underpins the cryptocurrency environment and serves as the backbone that allows it to thrive. You can’t have cryptocurrency without a blockchain beneath it. Blockchain is a de-centralized, distributed ledger operated and secured by state-of-the-art cryptography. Think of it as a massive, secure, interconnected accounting of transactions and data that doesn’t need to rely on a centralized party or entity to verify authenticity. It’s lightning fast; take the most efficient and trustworthy accountant you know and multiply them ten thousand times over.
So, if not synonymous with blockchain, what exactly is cryptocurrency? Let’s back up a bit and explore some basics. Cryptocurrency is the medium of exchange that facilitates the blockchain transactions themselves. Depending on the platform being used this can be publicly visible or occur behind the scenes. Cryptocurrencies can be used to pay for a product or service as well as be traded or exchanged. Bitcoin is by far the most prevalent cryptocurrency, but remains only one of 1,600 on the various blockchain platforms – all with varying uses and applications. Since Bitcoin resides on the first blockchain in existence, it has the honor of being the catalyst that drove the technology from the obscure to the mainstream.
As discussed in the Automotive Blockchain Part I: The Digital Glovebox, this technology allows vehicle information, such as insurance, service history, parts, and preferred repair shops, to be saved in a secure and transferable data block. When combined in a singular thread, vehicle owners gain the means to share preferences, records, and needs to whichever automotive store or repair center they come across. As cryptocurrency is built on blockchain, its addition to the automotive ecosystem will facilitate the means to reward drivers, or let them pay, for any number of things. Blockchain and cryptocurrency applications within the automotive industry are endless.
As our industry continues to evolve it’s important to keep these differences in mind. Cryptocurrency and blockchain technology are two very different animals, but there is one thing you can be certain of: the technology is here to stay. As you read this, blockchain is being deployed in very real business scenarios all over the globe by companies of all sizes. Now that you know the basics, what are you doing to leverage blockchain in your organization?