What is the Difference between Blockchain and Bitcoin?
For those of you who have been using the words “blockchain” and “Bitcoin” interchangeably, knowing the key differences between the two is imperative. Bitcoin and blockchain may be used in the same breath but they mean two very different things altogether. While the blockchain is a technology, the Bitcoin is a decentralized digital cryptocurrency. At the same time, they are inextricably linked to one another because the Biotin cannot exist without the blockchain.
What are Differences between the Blockchain and Bitcoin?
- The blockchain, simply speaking, is a ledger of sorts that contain records of transactions between parties. It is open and distributed, and can be viewed by everyone. Distributed means data contained in any block is replicated across thousands of other blocks in the network. This is why the blockchain has been regarded as a disruptive and groundbreaking technology. The Bitcoin, on the other hand, was created upon the blockchain. So, without it, Bitcoins cannot exist.
- Unlike centralized databases wherein records are controlled by one admin like a government body, the whole blockchain remains transparent because data is verified by multiple users via a consensus. This is why even though the blockchain may be transparent; it is completely secure and guards against double-spending. There is no one point which hackers can target. Bitcoins are decentralized cryptos which enable money-transfers without third-party intervention. Besides the Bitcoin, other cryptos are also supported by the blockchain technology. This is why the blockchain is far bigger than the Bitcoin.
- Blockchain has many uses beyond cryptocurrencies; its potential allows it to be used in different industries like healthcare, music, etc. It has the power to change the way businesses operate. For instance, the blockchain can execute smart contracts which may be used for automating payments between parties when contracts terms are satisfied. This not only saves time but can be useful to prevent payment-related discrepancies and disputes. Moreover, since the ledger is open and transparent, anyone can access it securely. Users can trace ownership of products right from its sources to make sure the records are clean. The Bitcoin, on the other hand, is used as an alternative to traditional payment systems. It guarantees faster payments across international borders in a hassle-free and cost-effective way.
- Blockchain focuses on transparency while the Bitcoin focuses on anonymity. When Bitcoin transactions take place between parties, records get added to the blockchain after being verified by miners or computers in the network. But user identities remain anonymous; this anonymity is what attracted people to the Bitcoin in the first place. It is also the reason why Bitcoins appealed to criminals dealing in purchase of illegal arms and drugs. Blockchain, on the contrary, must satisfy KYC rules in sectors like banking.
- While Bitcoins transfer money between parties, blockchain can transfer a variety of things, even property ownership rights. Blockchain helps users maintain transparent records, audit supply chains, and act as proof of insurance.
These are some basic differences between the Bitcoin and blockchain but the truth is both are essential to understand how the crypto market works. Both technologies are typically unregulated or under-regulated because of their complex structures.