There’s a common misconception that Bitcoin and blockchain are one and the same. The truth is that they are similar but not the same, and this article aims to clear up the misunderstanding.
A large reason why Bitcoin and blockchain get mistaken for the same thing is that they both started out from the same point. In 2009, Bitcoin was released by the person(s) under the alias Satoshi Nakamoto. This was also when blockchain technology was introduced, which plays a vital part in making Bitcoin what it is.
If they’re so connected, then what sets them apart from one another? Let’s look at them individually and see what we can find out from that.
Bitcoin is a digital currency that, in a lot of ways, works just like traditional currency - you can send it, exchange it, or use it to make purchases. A few things make it stand out, though:
A cryptographic system keeps the Bitcoin funds secure from theft.
Transactions, once completed, are locked in place and cannot be reversed, so they cannot be tampered with.
Said transactions are also publicly available, making errors or foul play easy to discover and track down to a culprit.
Blockchain is basically a digital ledger that records transactions of any kind. What makes it special is the following:
There exists no central authority to determine how or when transactions can happen, which removes a lot of red tape.
Each transaction is recorded on data blocks which cannot be altered.
These blocks are linked in a chain and, in combination with their decentralized nature, are particularly difficult to hack since all the data isn’t held in one place.
Transfer of data is public, so anyone can point out inconsistencies.
From these overviews one can see where the confusion comes from, which reveals the other big reason why these two are often conflated - Bitcoin and blockchain share quite a few key traits.
The catch is that Bitcoin is simply a practical implementation of blockchain technology - the blockchain’s principles applied to currency. You can think of it like this - Bitcoin is the money, while blockchain is the platform which facilitates its transfers.
Since blockchain can deal with basically any data, its application is so wide that it’s difficult to predict what we’ll be able to do with it in the future. Thus far, it’s been used in entertainment, supply logistics, real estate, healthcare and much more, while BItcoin is relegated to the financial realm. It should also be noted that other cryptocurrencies, like Ethereum, also run on blockchain technology.
So, to recap. Bitcoin does share a lot of characteristics with blockchain, such as decentralization, peer-to-peer transfer, and public, immutable records, but only because that’s the way blockchain inherently operates and Bitcoin uses it as its foundation.
If you desire to learn more about Bitcoin, blockchain technology, and cryptocurrency in general, feel free to go through this infographic crafted by the Bitcoinfy team.
This guide gives you all the information an aspiring cryptocurrency master must know. And don’t worry about it being confusing, since it’s presented in a colorful, plain to read, and easy to understand way.
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