Time To Separate Crypto From Blockchain Technology

Why Blockchain Technology Must Separate Itself from Cryptocurrencies

Often people confuse the terms “cryptocurrency” and “blockchain,” or they conflate the two. But while the two terms are related they are quite different.

How Is a Blockchain Different from Cryptocurrency

A blockchain is a decentralized computer ledger that records transactions independently of any authority. This means that the ledger is stored on numerous computers across the Internet, with each computer confirming each transaction made. Its existence removes the need for counterparties that exists simply to provide trust to parties involved in a transaction.

Cryptocurrencies are digital currencies that exist only in computer code, without the need of governments or authorities or banks. They also provide anonymity to their holders. Cryptocurrencies use blockchains to register transactions, and the two terms are often confused because blockchain technology was in itself created to support Bitcoin, which was the first and still the most popular cryptocurrency.

While cryptocurrencies require blockchains in order to function, many different types of applications can use blockchains. Including applications that have nothing to do with money or finance.

Blockchain Is Still a Relatively Unknown Concept

While blockchain technology has received much media attention in recent years, average people — even in the business world — lack knowledge about it. Hongkong and Shanghai Banking Corporation (HSBC), which is a prominent U.K.-based commercial bank, recently discovered that nearly 60% of its customers have never heard of blockchain technology, and among those who have heard of it only 20% really understand what the technology entails.

Why Many Are Averse to Blockchain Technology

Due to the close connection of blockchain technology and cryptocurrencies, many people think of them as the same. While this has helped bring the technology attention it would not otherwise have had, not all this attention has been good.

Many people are justifiably averse to cryptocurrencies because of the many scandals associated it. Foremost was Silk Road, which was something of an eBay for illegal merchandise that existed on a portion of the Internet that provides anonymity to users. Silk Road used Bitcoin for making payments, and when the U.S. government shut the site and arrested its owner, it brought negative publicity to both Bitcoin and blockchain technology.

There have also been a large number of financial crimes associated with cryptocurrencies. Mt. Gox, which was at one time the largest Bitcoin exchange in the world, shut down when hundreds of millions of dollars worth of cryptocurrency went missing and was likely stolen. Similar events at other exchanges have strengthened the notion in the minds of many that cryptocurrency and blockchains are something to be avoided.

Another factor that has hurt the image of both cryptocurrencies and blockchain technology has been the well-publicized volatility of digital currencies. Prices have risen and fallen dramatically in just the past year, and this makes blockchain technology seem unstable to many.

The Current State of Blockchain Technology

There is likely no industry in the world that blockchain technology could not improve, and many such applications all over the world are being developed. What’s more, not just startups are using the technology. A number of large companies are developing blockchain applications as well. They are using technology primarily to move data away from centralized databases.

Unfortunately, most blockchain applications are currently still in the early stages of development, and it may take years before they hit the market. Other companies are holding off developing blockchain applications until the technology becomes more widely adopted, which has created a classic “chicken or the egg” problem.

What Blockchain Technology Needs To Succeed

In order to fully meet its potential, blockchain technology must separate itself from its long-standing association from Bitcoin and other cryptocurrencies. Blockchain applications need to become associated not with scandal, crime and volatility, but with innovation and improving the lives of everyday people. To do this, the industry needs visionaries who can not only create the applications but also let the whole world know about them.