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Cryptocurrency is irrelevant and key to Blockchain

Blockchain technologies grew out of the work creating Bitcoin. With such a close connection for too many they have become synonymous. The reality is that whilst a crypto-currency helps oil the system, it is a sideshow in the future applications of blockchain.

Data is the key

What is in the Blockchain? Part 1 of this series explains this thoroughly explains the foundation and underlying nature of Blockchain. The key for us now, is this is about data.

Bitcoin — which was the fundamental proving and testing ground for blockchain — was storing data: who had mined the currency and who held the currency. But the blockchain can hold any type of data.

Let us look at it from a current legacy perspective. Organisations hold vast databases of staff, pay rates, inventory, sales, purchases and they do that using SQL-based technologies in the main. Banks who record accounts and what money is held in them, move money in and out and transfer it round the system use this same technology. Because who holds money is just data.

Applying a technology, not a straightjacket

Now we know it is a new way of storing data — a way to augment and eventually replace traditional databases, it is easy to understand innovative ways to use Blockchain. Think of asset tracking and transfer, registration and regulation of any kind of item, stock management, yield management, fintech transactions, version tracking, resale and royalty payments. Wherever we need to understand what, where and how something is happening, Blockchain can be part of that solution.

Back to the currency

Whilst it is easy to understand that the cryptocurrency is irrelevant, it is needed to keep the blockchain moving. You must have a way to pay the various operators of their systems that sit within the chain, even in private chains. The cryptocurrency (or coins) is the way you do that — by setting a percentage of your coins that you will pay to have your blockchain supported. We will talk about how investors in your coin gain value for their work in another article.

Finally, it is perfectly possible to create a peg to existing currencies. So, you can set £1=1 cryptocoin. No exchange rate fluctuations, no transaction costs for moving between currencies and no risk of unforeseen costs. This works in private blockchains in which tokens or coins never extend out into public trade.