Beginner: What is a blockchain in relation to cryptocurrency?

what is a blockchain

What is a blockchain in relation to cryptocurrency? I will use a couple of non-technical analogies to express the blockchain conceptually.

is to think of how the blockchain relates to the cryptocurrency industry overall. The first analogy is to think of a blockchain and cryptocurrency like a cake. Cakes are a category of dessert.  A blockchain is a category of databases.  All cakes essentially have the same ingredients or they wouldn’t be a cake.

Cryptocurrency in relation to the blockchain is the icing on the cake. Without all the ingredients coming together a certain way, there would be no cake and no need for icing. You don’t really need to break down the ingredients in the blockchain to understand cryptocurrency at this point.

However, understanding what the blockchain is and how it relates to cryptocurrency conceptually will help you make many more connections to possible investing opportunities.

Going down a little deeper into the technical aspect and how blockchain work is important as well. Technically speaking a blockchain is a type of database. Well, what is a database?

What is the blockchain?

With digital technology, it helps to think in terms of how it relates to or mimics the physical world. For example, a blockchain is a type of database in the digital world. A database, in a way, is like filing cabinets we use in the office. Therefore the second analogy is to think of a filing cabinet and how you use it to store information.

You have different drawers in the filing cabinet with different files organized in a certain way.  for example,  the files can be organized in alphabetical order.

When you want to retrieve a file (data), you think about what drawer it is located in, open the drawer and take out or retrieve the file. Think of a database as many many filing cabinets all chained or grouped together. using this analogy you can equate one drawer of the filing cabinet to one block withing the blockchain. Once in place, these blocks never move. ownership of the information on the blocks can be transferred over and over to different individuals.

Each time you go anywhere on the internet looking for information you are accessing a database that holds the information. The specific information you retrieve is equivalent to retrieving a file from the digital cabinet.

A blockchain is a is like a file in a cabinet with information in it. Each “block” can have a bundle or group of files in it. The information in the files cannot be altered by anyone. “it is tamper proof.” Being tamper proof or “unhackable” was the secret sauce that enabled bitcoin and currencies to begin.

In summary

How do blockchain and cryptocurrency relate to each other?

Think of them like cake (blockchain) with icing (cryptocurrency) on top.

What is a blockchain?

You can think of it as a digital drawer in a filing cabinet with many hundreds and millions filing cabinets all chained together.

Bitcoin and blockchain explained for the non-technical

 bitcoin and blockchain explained non-technical

What are bitcoin and blockchain? Here is a non-technical analogy to explain it conceptually.

Imagine you are going to bake a cake. You need a number of ingredients for the cake. You need flour, eggs, sugar, etc. Once you mix all the ingredients you pour the batter into the pan and put it in the oven to bake. once the cake is finished you put your icing of choice on it.

Every cake starts out with the same ingredients or it wouldn’t be possible for it to become cake. You can choose any of your favorite icings to put on the cake. The icings might change the flavor a little but the cake is the underlying component that is the same.

My analogy is, in essence, the cryptocurrency industry. The blockchain technology is the cake.  The cryptocurrency is the icing on the cake. The desire to get wealthy is the heat that bakes the cake and gives bitcoin value.

As someone new to the cryptocurrency game you must understand the difference between buying and investing in the cake (the blockchain technology) and getting tantalized and duped by those that are selling the icing.

It is estimated that ninety-nine percent of the cryptocurrencies (icing) on the market are no more than pump-and-dump currencies. in other words, the sellers of the currency will pump you up to buy the currencies which temporarily drives up the price. When the price gets high enough the early investors then dump the currency and leave those late to the game holding a worthless bag of promises.

The icing is only one flavor of many possibilities

I am not in anyway qualified to give investment advice. I do not have a securities license. However, I am a Certified Cryptocurrency Specialist and in addition to my knowledge, I do have common sense.

I say that to say this, educate yourself on the industry. Don’t get caught up in the oven and get burned. There is a lot of icing (cryptocurrencies) being slapped on different cakes (blockchains).

Bitcoin the cryptocurrency is an icing on its blockchain cake. Think of the bitcoin blockchain as a bundt cake.

Ethereum is another blockchain that has many other cryptocurrencies using its technology.

Think of the Ethereum blockchain as a “seven up cake.” Some of the ingredients are a little different but it’s still a cake (blockchain) different from Bitcoin.

Once you understand the blockchain technology, you can discern what type of cryptocurrency you would like to study and invest in.

What are bitcoin and blockchain?

To sum up the analogy.

Make no mistake that cryptocurrency is the future of money. Bitcoin (capital /B/) is a cake or blockchain that has its icing or cryptocurrency called bitcoin (lower case /b/). Like all cryptocurrencies, bitcoin is a by-product of the blockchain technology. Without the blockchain ingredients coming together, there would be no possibility of a secure digital cryptocurrency.

There have been other cryptocurrencies before bitcoin that failed because the ingredients were not there or not put together the right way.

Now that you can understand the industry of cryptocurrency and blockchain conceptually it’s time to get educated.