Bitcoin Forum

What do I answer if someone asks me this question? I have done some research but I am still confused so kindly help me out. And this is my first thread on forum kindly excuse me if I made any mistake.


Thank you!

A generic block chain doesn't need to use a cryptocurrency because it is just a distributed database. Also, a cryptocurrency such as Bitcoin is implemented using a block chain, so the question kind of doesn't make sense.

Regardless, I think this is the answer you are looking for: A decentralized database that records exchanges of value, such as a public cryptocurrency block chain, requires the representation of the value to exist entirely in the block chain in order to ensure its integrity. If the representation were to exist outside of the block chain, then it would not be possible to guarantee that the block chain matches reality.

No cryptocurrency, no block subsidy.

No block subsidy, no miners.

No miners, no security.


Public blockchains exist in an adversarial environment and as such must be protected from would-be attackers trying to tamper with transaction history or double-spending assets. This protection is bought and paid for by the cryptocurrency issued by the respective blockchain.

Of course such protection isn't needed for private blockchains that run in a trusted environment. A private blockchain can do without miners and thus without cryptocurrency. However the benefits of running a private blockchain in a controlled, non-adversarial environment remain questionable.

What do you mean by controlled and non-adversarial? Of course, a private blockchain is supposed to be controlled. There are some uses where a blockchain needs to be controlled, especially if it's a private one. And I really don't get what you mean by non-adversarial

I'm using the term "non-adversarial" synonymous with "trusted" in this case. Meaning an environment where you don't expect any of the participants to defect, eg. by sending a fraudulent transaction or attempting to tamper with the transaction history.

What I mean to say is this: While private blockchains can do without a native cryptocurrency, I don't see the benefits of a private blockchain over a classical database. If a central entity already has control over which data is added one might as well simply use more performant and scalable technologies that are just as secure in the given context. I'd love to hear contrarian opinions though, albeit this may stray a bit too far from the original topic.

Blockchain and cryptocurrency are two different things but they are inseparable.  Cyrptocurrency is digital currency which can be used in financial transactions and those transactions are automatically recorded in digital ledger called blockchain.  This is same with the existing accounting principle. Every transaction should be recorded properly for monitoring and transparency of records.  The good thing in blockchain is, it is made publicly and cannot be corrupt by hackers.  In this manner, you can see that in every cryptocurrency there is always the blockchain.

True, but OP's question was actually the other way round:  Not "cryptocurrency needs blockchain" but why a "blockchain needs cryptocurrency" (which is not the same thing logically!).

That was already answered well before:  At least in a decentralised and permission-less blockchain, you need the cryptocurrency to incentivise miners and get the game theory right (i.e. so that there are economic incentives to stay in consensus with others).

Blockchain is a system that records transactions that have occurred then stored by all computers spread on the network itself, for example if you pay for coffee with Bitcoin, then you transfer to the address of Bitcoin cafe that sells the coffee in peer to peer and this transaction will recorded on all computers scattered on the Bitcoin network, so it will be harder to hack hundreds or even thousands of computers in the transaction, in terms of security Cryptocurrency really needs this Blockchain system.

Blockchain is a technology with many applications whereas cryptocurrency is only a part of the blockchain applications. There are other applications without need for cryptocurrency.

That was basically the OP's question.  In my opinion, there are no really sensible applications of a blockchain without a cryptocurrency, because that would then mostly be a private blockchain and, essentially, just a very inefficient database.

Perhaps need more understanding of the core fundamentals of Blockchain technology, its foundation and wider applications before asserting the ' impossibility of its existence without a cryptocurrency'. Bitcoin is a cryptocurrency that made Blockchain famous but this does not mean that Blockchain is all about cryptocurrencies and cannot exist without one. Blockchain has been in use for unconventional hightechs without crytpocurrencies involved.

Even non-proof-of-work blockchains need internal currency: proof-of-stake need it to ensure that block producers
risk their stake in case things go wrong (like BTC or USD price of their assets dropping on news that they managed to break the system)
and proof-of-authority need it to reward witnesses/oracles from transaction fees.
Proof-of-burn, also called proof-of-sacrifice, however, can use currency on another blockchain: I can give right to produce block
to public key who burned some coins or tokens on e.g. LTC or ETH. But even they need currency to sacrifice, external to their blockchain.

Through the block rewards and the fees subsidized by the users. I believe that should be said to make the newbies and old users deeply understand that decentralization, security, sovereign ownership, and censorship resistance each comes with a cost, especially in times when fees become high.

The miners need to be incentivised to conduct the PoW, and without the monetary/currency incentive, the network is not run.

Good point! I don't think this statement can be generalized though, meaning it largely depends on the respective cryptocurrency's issuance policy.

While true for Bitcoin (and other deflationary PoW-based cryptocurrencies), in the case of a cryptocurrency that stays forever inflationary without a decreasing block subsidy I'd argue that the role of transaction fees is reduced to being an anti-spam measure, adding little to the incentive already posed by the block subsidy. (ignoring other long-term effects such a monetary policy could have on PoW's incentivisation)

Blockchain doesn't need any cryptocurrency. You also can realize projects of services, documents and goods and just data f.e. for managing passwords and documents for governments, services, insurances and more. So there is no need to use several passwords for each place, you just give out certain permissions for  each service. (Just don't loose your private key :) ) Blockchain is also good to reduce the need of middlesmen, for example in the logistic section. You also can organize smart home and apps in the internet of things with the blockchain. When you f.e  rent out your appartement you can give out a smart key app and organize the using permissions through blockchain. So, when your custumer paid the rent, he automticly could get the smart key for unlocking the appartment and as soon as the rental period is over, your appartement is locked for him. You can buy/sell goods and other things(f.e. cars) without centered service or work as photograph/buy pictures and use blockchain to organize copyrights etc in a secure and transparent way without further instance.

Serious question -- can you give an example for a blockchain that enables any of these use cases while relying on neither (a) a native currency nor (b) a third party service provider securing said blockchain?

You may try to create one smart contract with the ethereum wallet and try how the ethereum blockchain ledger works. Most of the companies asking for private blockchain to maintain their database much secured.
Hence you can see any kind of project which is similar to that and work on it.

Public block ledger is the one we are seeing the Bitcoin and other coins in transaction with their ledger explorer.

Ethereum has a native currency and private companies maintaining private blockchains are the very definition of third party service providers, so that doesn't answer my question. As per the question above I'd love to hear whether there's an example where neither is the case.

Because this technology created for the purpose of creating new currency that is not controlled by th government and its just so happen that the technology behind cryptocurrency is called blockchain technology. If this is the case then blockchain technology will become an ordinary software making your business effectively.

Like others have said cryptocurrency is the means of incentivizing miners to help verify transactions and reach consensus on the blockchain. I don't think that many people would be willing to pay a large electricity bill unless they are rewarded for their contribution. Aside from the technology benefits i believe there's also social benefits of bringing people together for a common purpose. It breaks down social barriers and enables people to change their lives for the better. Cryptocurrency is the driving factor behind all of this.

There are many projects around without cryptocurrency for example in the section "self souvereign identity" f.e. sovrin, uport, blockstack etc. There are also planned blockchain projects by governments, agencies and private blockchains. So to return to OP's question, blockchain doesn't neccessarily mean, that cryptocurrencies are needed. Cryptocurrency based blockchain is only a part of the possibilities of this technology.

Both Sovrin and Blockstack rely on tokens ie. a native cryptocurrency.

https://sovrin.org/wp-content/uploads/2018/03/Sovrin-Protocol-and-Token-White-Paper.pdf

https://blockstack.com/tokenpaper.pdf


uPort is built on top of Ethereum, ie. relying on a cryptocurrency-based blockchain for its security.

https://developer.uport.me/overview


While their main use case is not monetary transactions, all three rely on either being a cryptocurrency as well (Sovrin, Blockstack) or on running on top of a blockchain that is secured by cryptocurrency (uPort). So we still only have examples of cryptocurrency-dependent blockchains :X

Guess you meant "Why Cryptocurrency needs Blockchain."

Blockchain can actually exist without Cryptocurrency, not sure if Cryptocurrency as we know it can exist without Blockchain.


Cryptocurrency needs Blockchain
-  For decentralization
-  for Censorship resistance
-  For anonymity
- For Peer to Peer transactions
- To Have immutable transactions recorded on the Blockchain.  
- To avoid double-spending
Etc

It will be better if you often visit cointelegraph and read some news (this is my go to source).
Georgia is the first country which implemented Blockchain Land title registry, this is innovative project and adds extra layer of protection to this service, it ensures customers that all data is safe. They have their NAPR webpage where you can search with document's hash code and you can search with the same code on websites like blockchain.info (blockchain.com) blocktrail, btc.com and etc...

If a blockchain has no currency attached to it. There's no need for the blockchain itself. You will get an empty ledger.

The right question would be. Can we attach an exiting national currency to a blockchain? Very unlikely.

First of all there's need for massive cooperation from current system.
What i would ask. Why we need one? Most of national currencies are already working digitally. IMO they're working just fine.


Bitcoin's birth was because of lack of trust on existing national currencies. It also helped removing restrictions existed/imposed to transact inter-nationally.

A transaction in the blockchain can be configured to be not a currency. It doesn't have to be a currency per se. Lets say a developer created an election voting system that uses blockchain. Currency isn't involve in this situation but can just be a proof that you as a voter had already voted. Blockchain can be used in  different manner so its not necessarily just for digital  currencies.

There's also DAG-based coins though (of debatable merit of course, but that's a different discussion).

And I'm still not sure how one would secure a blockchain without incentivising miners / stakers by means of a native token (or by building on top of an existing cryptocurrency).



Blockchains are transparent by design. Anonymity is achieved by specialized transaction formats,.



Blockchains don't prevent double-spending. PoW does. (and arguably other forms of Proof-of-Resource such as PoS)

Actually, it's quite the opposite. Blockchain doesn't need cryptocurrency, but rather cryptocurrency was created for and using the blockchain technology. Simply said, blockchain will work without cryptocurrency. The blockchain is a ledger that shows and records all the transactions of a cryptocurrency. So basically, all of a cryptocurrency's workings can be tracked down in the blockchain, and it's tamper-proof. However, DApp or blockchain creators require cryptocurrency to somehow reward their users and miners and to attract more people to utilize it.

Aside the technicalities that surrounds the blockchain which makes it different from bitcoin which a lot of people don't even get to know or understand, blockchain needs crypto currency for awareness and publicity. Today, a lot of people don't get to know about blockchain until they got involved with crypto and the quest for knowledge led to the discovery of what blockchain is really about. The discussion about blockchain today wouldn't have been possible without crypto currency. There are several technological breakthrough happening in several fields today but because there is no attracting factor to laymen, it becomes a technical jargon only understandable to people in that field and that is what crypto makes available to blockchain.

Blockchain does not needs cryptocurrency infract the cryptocurrency needs blockchain technology. It is due to this technology that cryptocurrencies are decentralized. Blockchain is a public ledger where all the personal information can be stored and you will decide what part of information you want to share and which not. So it can be very helpful in many sectors like banking, insurance, healthcare, supply chain management, etc.

It's the other way around. Think about it:
No bitcoin or no cryptocurrency means => no asset available to reward miners => No miners means => Official validators required
But this means that we're turning around in circles back to a Central authority that provides governance!
Another question is why should appointed validators use a blockchain when they're the only ones authorized to validate blocks?
Why all the effort to mine and give PoW to themselves?