In the past few years, “Blockchain” and “Bitcoin” have been together with digital technology, but they are as different as chalk and cheese. Both revolutionary in their nature, it is necessary to understand the basic differences between them. In this article, we will learn about blockchain and bitcoin, their applications, their working, and why they cannot be used as synonymous for each other.
What is Blockchain?
Blockchain is a distributed computer ledger technology that records transactions on many computers in such a way that recorded transactions cannot be altered afterwards. Blockchain offers security and transparency through the use of cryptographic techniques. Think of it as a shared database to which anyone has access but to which only a few people have access rights to modify.
The core idea of blockchain is decentralization. As opposed to traditional systems relying on a centralized authority, blockchain is designed on a peer-to-peer network, which is even more secure and tamper-evident. Blockchain is used to develop various applications, some of them being cryptocurrencies, smart contracts, supply chain management, etc.
What is Bitcoin?
Contrary to the traditional physical or hard cash money, Bitcoin is a virtual money or a form of money that exists in electronic or digital only. Bitcoin’s underpinnings are rooted in blockchain technology. It was created and founded by a person or group (anonymous) of Satoshi Nakamoto in 2009 with the purpose of providing peer-to-peer payment without involving a middleman such as a government or a bank.
As opposed to conventional currencies, Bitcoin exists solely in the virtual sphere, and miners using processing power verify and secure transactions by solving intricate mathematical problems. It does away with middlemen and enables users to exchange directly with each other.
Principal Differences Between Blockchain and Bitcoin
Having grasped the fundamentals of blockchain and Bitcoin, let’s proceed to their main differences:
Purpose:
- Blockchain: Blockchain is the technology behind most of the applications, including cryptocurrency. Blockchain is a transparent, secure, and decentralized transacting system and performs better in industries.
- Bitcoin: Bitcoin is a crypto asset that uses blockchain technology. It is a medium of exchange whereby individuals exchange goods and services without the involvement of banks.
- Blockchain: Blockchain is an umbrella term that can be used in any industry, such as finance, healthcare, supply chain, and even voting. Blockchain secures information, makes it immutable, and is transparent.
- Bitcoin: Bitcoin is just one of the uses of blockchain technology. Bitcoin is a digital currency that employs blockchain to make transactions secure. Bitcoin is only used for financial purposes, while blockchain can be used in many other applications beyond money.
Decentralization:
- Blockchain: Blockchain is decentralized since transactions are not under central control. It is being controlled by network members to present a trustless environment.
- Bitcoin: Bitcoin is decentralized but merely for the process of creating and verifying transactions. Bitcoin’s decentralization is upon blockchain technology.
Scope:
- Blockchain: Blockchain is more generic and can be used for so much more than cryptocurrency. Any kind of data or transaction can be put there, so blockchain is an all-purpose business and industrial tool.
- Bitcoin: Bitcoin is cryptocurrency with some sort of special use case—it’s basically an investment or trade financial tool. While it does make use of blockchain, though, Bitcoin itself is not nearly as general-purpose in application.
Public vs. Private Use
- Blockchain: Blockchain can be public or private. Public blockchains are open to everyone, while private blockchains are restricted to invited parties. Blockchain is intended for a wide range of applications beyond Bitcoin.
- Bitcoin: Bitcoin utilizes a public blockchain, where everybody has access to look and join the network. Pseudonymity protects the anonymity of users of Bitcoin, but transactions are open.
In simple terms, blockchain and bitcoin are understanding that although they’re actually very much related, they’re not identical. Blockchain is a technology developed on top of Bitcoin, but blockchain has a far wider range of uses beyond cryptocurrencies. Bitcoin is a virtual currency utilizing blockchain technology for the exclusive purpose of peer-to-peer money transfers.
As we keep on going and advance the future of blockchain technology, keep in mind that Bitcoin is only one of the possible uses. Even if you are not interested in cryptocurrency, but more so in other blockchain innovations, blockchain and Bitcoin both have bright futures.
For additional information on diving into blockchain and Bitcoin, read more resources on Blockchain77.
By understanding the differences between blockchain and Bitcoin, you’ll be better equipped to navigate the exciting and evolving world of digital technologies.