Blockchain NOT Crypto - Blockchain Basics for RIAs
The terms "Blockchain" and "Cryptocurrency" are often used interchangeably, leading to misconceptions about their fundamental concepts. To provide clarity, let's explore concise definitions:
Blockchain: At its core, a blockchain is a robust and decentralized digital ledger technology. It operates as a secure, transparent, and immutable record-keeping system across a network of computers. This technology acts as the foundation, establishing a single source of truth for various applications.
Tokens: Tokens are digital entities that can represent a broad range of assets, protocols, or serve specific application purposes. They reside within the realm of blockchain platforms and offer digital proof of ownership or participation within various ecosystems.
Cryptocurrency: The term "Cryptocurrency" is a catch-all term that can create a misunderstanding that blockchain networks intend to replace traditional currencies. This is not the primary objective of these networks.
It's crucial to understand that tokens play a pivotal role in the operation of blockchain technology. Let's illustrate this with an example: Avalanche. In this context, Avalanche represents the core blockchain technology, while AVAX functions as its associated token. One of the key roles of the AVAX token is to serve as a reward mechanism for validators who secure the Avalanche network. It is a critical component in upholding the integrity of the blockchain, rather than an attempt to replace traditional currencies.
This distinction is crucial because it highlights that blockchain technology's power lies in its ability to revolutionize various industries by providing transparent and secure record-keeping, and tokens are the instruments that enable this transformation.
This is why we choose to support infrastructure, rather than simply acquiring and holding tokens. Our belief lies in the fundamental technology of blockchain and its myriad of use cases. We understand that blockchain is a game-changing innovation with the potential to reshape industries, and we are committed to contributing to its growth and development.