Cryptocurrencies have become popular with the high demand for digital transformation. There are many types of cryptocurrencies and there are debates about their utility. The ongoing debate is how Blockchain is different from Bitcoin. It is important to note that Blockchain is the technology used by cryptocurrencies., whereas bitcoin is the first successful implementation of blockchain technology. In this article, we will discuss how these two terms are different from each other.
In order to know the difference between bitcoin and blockchain, it is important to understand what these key terms mean and how do they work.
Blockchain as a concept was conceived in 1991, which is basically a form of digital payment between two or more parties. It has many types. It works as ‘a distributed ledger technology that supports multiple parties in transactions, sharing valuable data and pool in their resources with higher security and tamper-proof assurance.’
Blockchain is in a decentralized form. There are 3 important components:
- Nodes: They are the most important factor for making Blockchain decentralized. They also make sure that no organization controls the blockchain. The integrity is maintained, preventing privacy breaches through systematic or unsystematic information exchanges.
- Miners: People that create blocks by solving complex mathematical problems. The structure of the environment plays an important role in block creation.
- Blocks: Each block contains all the important information about the transaction. The block has a unique hash with a time stamp. The more blocks are added to the chain, the more complex it becomes to hack, manipulate or exploit.
The blocks offer better integration and security. There is transparency and visibility among the transactions. There are zero transaction costs.
Bitcoin is one of the first cryptocurrencies that took advantage of blockchain technology for peer-to-peer payment. They offer the lowest transaction fees as compared to the other currencies. Bitcoin wallet is a secure mode and can be downloaded for sending, receiving, and storing funds. It can be downloaded on a phone, PC, or any other digital device.
It doesn’t have a physical form like paper money. It has public and private keys. The public key is the account number, whereas the private key is the ATM pin. Bitcoin is divided into eight decimal places, where the smallest unit is known as Satoshi. The transaction process is straightforward.
Blockchain is different from Bitcoin
The important difference is that of application and technology. Although people confuse it with bitcoin being the first one to use blockchain technologies.
- Blockchain is used to store data and can be accessed due to its identity as a distributed ledger. Whereas, Bitcoin was developed with the objective of speeding up cross-border transactions. Subsequently, Bitcoins also aim at simplifying payment systems by excluding third-party intermediaries while reducing government control over transactions.
- Blockchain has a lot of practical implications in the private and public sectors. Public sectors include the storage of public health records and land registries, identity management systems, and immutable voting platforms. Big tech giants are also capitalizing on blockchain technology in the private sector with massive investments. It has also found applications in logistics and supply chain management for achieving better transparency alongside immutable transaction registries. blockchain can be suitable for transferring anything that has value, including currency, stocks, or property titles. The top industries which are taking initial steps towards blockchain adoption include the automobile industry, music, aviation, telecom, and entertainment industries. Most important of all, blockchain also presents opportunities for designing smart contracts that help stakeholders in exchanging goods by excluding expensive intermediaries. Contrary to this, Bitcoin is just a currency. It has no advantage other than this.
- Bitcoin reduces the transaction time as well as the cost of influencers. Users need a wallet where selected methods are used to earn bitcoin. Blockchain on the other hand is flexible and has no restrictions. It can adapt to different changes according to the user’s requirements.
- Bitcoin remains anonymous in terms of interpreting the numbers in a specific sequence. Blockchain is more transparent and follows all the compliance requirements.
To conclude, Blockchain is the larger set whereas Bitcoin is one of the contents.