By Shivani Uppal on The Capital
Curious to know what exactly is the difference between Blockchain and Bitcoin? You have landed on the right page. This article explains the concept of blockchain technology and Bitcoin cryptocurrency and distinguishes between the two.
What Exactly is Bitcoin?
Although fundamentally apart, many people feel that blockchain and bitcoin are synonymous. Let’s understand both these terms in detail.
Now, Bitcoin is a cryptocurrency, created to simplify transactions without involving third-party intermediaries. It is a currency that you can own trade, purchase, or invest in. Let’s talk about cryptocurrency. Cryptocurrency is a medium for the exchange of immutable or intangible objects created and stored in the blockchain. To put its definition in simpler words, it is a digital form of currency stored electronically on the blockchain platform. The originator of cryptocurrency is believed to be Satoshi Nakamoto. However, it is still not confirmed whether he is a single person or a group of experts who invented Bitcoin.
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Blockchain- A Disruptive Technology
Blockchain is a peer-to-peer distributed ledger technology, which means the data contained within the blockchain is distributed across various computers and is therefore decentralized. Anything that is stored over the blockchain network can’t be changed or modified, and this feature makes it the most secure. Moreover, with the help of this technology, participants can perform transactions digitally with the need for a central authority, unlike traditional systems where transactions are processed by one central administrator.
Blockchain is the technology underpinning Bitcoin, and it was specifically developed for Bitcoin cryptocurrency, and Bitcoin was the first example of blockchain. Today, blockchain technology is revolutionizing almost every sector. From maintaining a shared, transparent system of record to auditing the supply chain, and providing proof of insurance, there are numerous applications of blockchain in real-life.
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Blockchain Vs. Bitcoin-Major Differences
Before pointing out the differences between the two, it should be noted that blockchain has potential applications far beyond bitcoin and cryptocurrency. Now let’s start comparing them based on various aspects.
- Fundamental Difference
Bitcoin is a cryptocurrency based on the foundation of blockchain technology that is used to reduce the transaction time and transaction charges across cross border payments. On the other hand, blockchain is a decentralized distributed ledger technology that enables peer-to-peer transactions in one of the safest environments. Blockchain is designed to be immutable, secured, and offers complete transparency and enables faster settlements globally.
When it comes to Bitcoin, it is restricted to trading as a currency only. But if we talk about blockchain technology, it easily transfers anything from currencies to property rights of stocks or anything of value. Blockchain is not only restricted to currency exchange, rather it has various other implications. It allows asset owners to track and trade things of value, reduces friction in business transactions, manages and secures decentralized private records with encryption, can track the provenance of products and materials, and much more.
Bitcoin’s scope is limited to trading, and it has no other purpose. Bitcoin focuses on increasing system efficiency and enables the provision of financial services at a drastically lower cost, giving users more power and freedom. Blockchain, on the other hand, has its implications in almost every sector, including supply chain management, asset management, cross-border payments, digital advertising, to name a few, and this is the reason why top tech giants are looking forward to this technology for mass adoption.
To sum up, we can compare the two entirely different terms on the basis of various factors. Where Bitcoin enables the transfer of currency between users, blockchain can be used to transfer anything of value, including information, property ownership rights, etc. Bitcoin is nothing but just a cryptocurrency, while blockchain is a distributed database. Bitcoin is powered by blockchain technology, but blockchain has several use cases beyond Bitcoin. Blockchain is the fundamental block of Bitcoin and other trending cryptocurrencies, such as Litecoin, Ethereum, Ripple, and ZCash, to name a few.
Remember, blockchain is neither a bitcoin nor any other cryptocurrency. Cryptocurrency, like Bitcoin, is just a use case of blockchain technology.
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