Cryptocurrencies the pattern how they work?

hink of blockchain as record-keeping infrastructure of millions of interconnected user-nodes. These user-nodes build and maintain this record-keeping infrastructure and also use it for their own record keeping. The technology is designed in a way that users need “ink” to write their records. When the users build and maintain the infrastructure, they collect ink as fee from other users. And then the users use the ink themselves to write. This makes the blockchain ecosystem self-sustaining without depending on any government or organisation owning, building and maintaining it.

This ink is nothing but cryptocurrencies. The cryptocurrencies are given as incentive for the nodes to continue building and maintaining the blockchain. Thus, a self-sustaining blockchain aka “public” blockchain is not possible without cryptocurrencies. A “private” blockchain that is built and maintained by someone privately (for eg., a CBDC blockchain run by the government) may not need cryptocurrencies.

And what are they not? Cryptocurrencies should not be seen as a currency. The name cryptocurrency is a misnomer. They do not serve as an alternative to the Rupee or other fiat currency. They really are an asset/software that is used to write on the blockchain and for incentivising the nodes – if at all they serve as an instrument for payments, this use case is limited to within the blockchain ecosystem to incentivise the nodes.