For non-tech savvy people, blockchain is mostly used for cryptocurrency, and they don’t know blockchain has other uses too.
What is a blockchain if it doesn’t involve crypto?
A blockchain without crypto is a distributed ledger that stores information about nonfungible tokens (NFTs), supply chain projects, and other things.
Even though Bitcoin (BTC) is the best-known use of a decentralized ledger or Blockchain, the technology has many other applications. For example, blockchain technology can be used in remittances, digital assets, and online payments because it makes it possible to settle payments without a bank or other middleman.
Also, smart contracts, reputation systems, public services, the Internet of Things (IoT), and security services are some of the most promising ways to use blockchain technology for the next generation of internet interaction systems.
A blockchain that doesn’t involve cryptocurrency is a distributed ledger that keeps track of how a shared database is doing for many users. The database can store things like the history of cryptocurrency transactions or confidential election voting data that can’t be changed or deleted once it’s been added.
So, blockchain technology is useful for more than just cryptocurrencies. On the other hand, Blockchain is mainly about the decentralized storage of information and the consensus of certain digital assets, which may or may not be cryptocurrencies. So, can anything be done with Blockchain?
In an ideal world, blockchain technology could replace business models that depend on third-party and centralized systems trust. For example, NFTs were first used on the Ethereum network in late 2017. They are one of the disruptive innovations that affect intellectual property based on Blockchain but not cryptocurrencies. But before you invest in NFTs, you should know about the risks and returns that come with them.
Does cryptocurrency need to exist for a blockchain to work?
For a public blockchain to work, it needs cryptocurrency. A private blockchain, on the other hand, doesn’t need it.
The two main types of blockchains are public blockchains and private blockchains. Public blockchains don’t require permission to join, so anyone can join the network and use the Blockchain. Private blockchains, on the other hand, are not decentralized. Instead, they are networks that are only open to people who have been invited.
Permissionless blockchains like the Bitcoin blockchain give people on the network, called “miners,” money for solving a complex math puzzle. This incentive often provided as a network’s token, drives the system as a whole and helps reach a consensus in particular.
Bitcoin mining is done on thousands of computers right now because it pays people to do it. By taking away the cryptocurrency rewards, people will be less likely to run a node and participate in the consensus mechanism. This will make crypto heists more likely.
Hyperledger and Corda are two examples of private blockchains. The Linux Foundation did the Hyperledger project. It uses private blockchains to make distributed ledgers that support private business transactions. Corda is another permission blockchain project made by R3. It is for companies that want to build private, interoperable, distributed networks that can handle private transactions. Because centralized corporations run private blockchains, there is neither a mandate nor a need for cryptocurrencies to power or reward network members.
Can you invest in Blockchain without buying cryptocurrency?
You can’t directly invest in a blockchain. On the other hand, investing in blockchain-based startups is one way to learn more about Blockchain beyond investing in cryptocurrencies.
Users and organizations want to speed up transactions, improve security and transparency, and use Blockchain as a service. This gives the blockchain industry many opportunities (BaaS). One way to learn about blockchain technology is to put money into companies that offer BaaS, like IBM or Microsoft.
You can also buy stocks of a company working on blockchain solutions to invest in distributed ledger technologies without buying cryptocurrency indirectly. This means that Blockchain is useful for more than just supporting cryptocurrencies.
One area where Blockchain makes a big difference is the supply chain. With an unchangeable public record of every transaction, you could, for example, track a crop back to the farm where it was grown. A distributed ledger can keep track of the making, transporting, and delivering of a waste picker’s recycled item to a recycling center or station. One can put money into companies that work in these fields.
Whether you invest directly or indirectly in blockchain-based startups, you should be aware of the risks, such as bugs, hard forks, or mistakes made by people. When investing, you should never risk more than you can afford to lose.
Can there be smart contracts if there is no blockchain?
For smart contracts to work, they need blockchain technology. This is because Blockchain lets automated agreements be made and carried out without the help of a third party.
Database systems, like smart contracts, can have parts that run on their own, like triggers and stored procedures. Still, they can’t enforce data integrity because anyone with admin rights can undo any transaction, delete transaction data, etc., and make it look like it never happened. Because of this, smart contracts that need to be safe and hard to change will always need Blockchain. The most popular cryptocurrency, Bitcoin, doesn’t support smart contracts that are hard to understand.
Without Blockchain, smart contracts could not be widely used with any other technology today. On the other hand, smart contracts need blockchain oracles to call off-chain data sent to the distributed ledger at set times. Oracles make it easy to access resources that aren’t on the Blockchain but to do so. The parties need to sign a contract with a new party. This may take away from the benefits of smart contracts being decentralized.
It also makes a point where something could go wrong. For example, if an oracle has a problem with its system, it might not be able to send out the needed information, send out wrong information, or stop working. So, smart contracts must solve these problems before they can be used more widely.