Blockchain technology is a type of distributed ledger system in which transactions are recordedsimultaneously on multiple computers all over the world, making the system impossible to change, hack,or cheat. Blockchain stores digital records of data.

Let’s paint an illustration: Mariam and Muhammad are in a romantic relationship, and Abdulmalik ismeant to document everything that happens in the relationship.

Muhammad pledged to marry Mariam, and she, true to the commitment, turned away all other suitors.After several months, Muhammad renounced his interest in the relationship, claiming he nevercommitted to marrying Mary. Unfortunately, Abdulmalik failed to document Muhammad's promise,leaving Mariam with no proof of the commitment.

Had Muhammad made this promise in the presence of Abdulmalik, Aminah, Alex, Aisha, and ten others,who documented it on their personal ledgers, there would be evidence. In the event of Muhammad's denial, they could present their ledgers to counter his claims.

This scenario illustrates the workings of centralized ledgers and distributed ledger technology.

Blockchain technology is essentially a distributed or decentralized form of the ledger in whichtransactions and data are stored simultaneously in multiple computers (ledgers), preventing a singlepoint of failure. Blockchain, as a type of ledger, operates in blocks rather than rows and columns astraditional ledgers do.

Blockchain operates in “blocks”. Every block in a Blockchain contains several numbers of transactionsand every time a new transaction occurs on the Blockchain, a record of that transaction is added toevery block that was created previously, which is made public and easy to access and monitor byanyone, anywhere, and anytime.

Every transaction is made up of a different block and numbers, known as “Hash” the hash in each blockcan’t be repeated.

In blockchains, the hash function is used for encryption. It accepts data and generates an alphanumericoutput that is constant regardless of the size of the imputed data.

This makes determining the hash function’s imputed data nearly impossible. Because blocks are chainedtogether if one block in the sequence is tampered with, it affects the other hash in other blocks, and allthe blocks would have to be changed before the network could be hacked, which is impossible. As aresult, Blockchain is extremely secure and immutable.

Cryptocurrency is a digital payment system that does not rely on banks for transaction verification. It’s apeer-to-peer payment system that allows anyone, anywhere to send and receive money.

Cryptocurrency payments exist solely as digital entries to an online database describing specifictransactions, rather than as physical money carried around and exchanged in the real world.Transactions involving cryptocurrency funds are recorded in a public ledger.

This makes determining the hash function’s imputed data nearly impossible. Because blocks are chainedtogether if one block in the sequence is tampered with, it affects the other hash in other blocks, and allthe blocks would have to be changed before the network could be hacked, which is impossible. As aresult, Blockchain is extremely secure and immutable.

Bitcoin was the first cryptocurrency, and it was built on a Blockchain to address the problem of moneytransfer and payment. There are no governments, central banks, or groups of people that act asintermediaries or custodians of bitcoin, nor can the supply of bitcoin be altered.

Blockchain allows cryptocurrency (digital money) to exist, making it decentralized and peer-to-peer. Thismeans that, unlike the traditional financial system, no intermediary is involved in the transactions, onlyan open, publicly verifiable line of codes. This renders the system trustless

In the traditional financial system, the banks act as intermediaries between two people whentransferring or storing money.

This means that if Mariam wants to send money to Muhammad, she must first take the money to the bank, where the transaction is recorded on a ledger as the money is sent to Muhammad.

This demonstrates that if Muhammad later claims that Mariam did not send him the money, the ledgercan be looked into proving that Mariam did indeed send the money to muhammad. The problem withthis Is that all parties must have faith in the bank and its ledger. This is a centralized database that couldbe manipulated.

Banks also save money on behalf of their customers. They are not required and, in most cases, do nothave the depositor’s money on hand, which means that if there is a bank run, the banks will be unableto repay their customers, as happened in the United States of America during the 2008 housing crisis.

This resulted in the development of cryptocurrencies. Blockchain technology powers a trustlessdecentralized money and transaction mode.

As such, cryptocurrency is a type of decentralized digital currency based on Blockchain technology.Instead of banks maintaining individual ledgers of transactions, blockchain has a public ledger where alltransactions are stored and saved by different people on different computers all over the world. Theyare known as miners.

A fiat currency is one that a government declares to be legal tender. In contrast to cryptocurrency, fiat money is highly centralized and controlled by government entities. The US dollar is the most widely used fiat currency today. The British pound, euro, and Japanese yen are also popular currencies. Fiat currencies lack intrinsic value but are acceptable due to the government’s backing

Cryptocurrency, on the other hand, is a digital or virtual currency that secures its transactions withcryptography. Cryptocurrency is decentralized, which means it is not controlled by the government orfinancial institutions.

The first and most well-known cryptocurrency, Bitcoin, was created in 2009. Thousands of othercryptocurrencies have been created since then. Ethereum, Solana, and Avax are among the mostpopular.