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Author Topic: "Why blockchain needs cryptocurrency?"  (Read 462 times)
yuvadeep
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July 31, 2018, 08:37:37 PM
Last edit: August 01, 2018, 05:20:52 AM by yuvadeep
 #1

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.


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July 31, 2018, 09:12:17 PM
Last edit: July 31, 2018, 09:28:41 PM by odolvlobo
 #2

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.

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July 31, 2018, 09:50:48 PM
Merited by suchmoon (7), d5000 (1), monsterer2 (1)
 #3

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.

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July 31, 2018, 10:30:55 PM
 #4

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

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July 31, 2018, 11:07:21 PM
Merited by LeGaulois (1)
 #5

[...]

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.

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August 10, 2018, 04:49:12 AM
 #6

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.
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August 10, 2018, 05:55:30 AM
 #7

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).

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August 10, 2018, 06:46:03 AM
 #8

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!

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.
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August 10, 2018, 01:40:57 PM
 #9

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!

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.

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August 10, 2018, 04:29:21 PM
 #10

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!

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.

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August 11, 2018, 02:55:35 PM
 #11

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!

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.

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August 11, 2018, 03:08:18 PM
 #12

No cryptocurrency, no block subsidy.

No block subsidy, no miners.

No miners, no security.
...
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.

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August 12, 2018, 06:16:43 AM
 #13

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.

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.



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August 13, 2018, 09:24:52 AM
 #14

The miners need to be incentivised to conduct the PoW, and without the monetary/currency incentive, the network is not run.
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August 13, 2018, 12:56:15 PM
 #15

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.

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.

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)

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August 13, 2018, 01:19:27 PM
Last edit: August 13, 2018, 01:33:11 PM by Zocadas
 #16

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 Smiley ) 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.
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August 13, 2018, 02:04:31 PM
 #17

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. [...]

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?

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August 13, 2018, 05:51:01 PM
 #18

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. [...]

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.
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August 13, 2018, 07:08:19 PM
 #19

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. [...]

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.

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.

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August 13, 2018, 09:17:10 PM
 #20

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. [...]

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?
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.

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