MARKNetwork Blockchain: Blockchain vs Bitcoin
Understanding the difference between Blockchain and Bitcoin
Short summary of the article:
“Do not get left behind”
»Battling with the traditional banking system, Bitcoin fortified its stance in the market. Same stands true for blockchain. But even when the enterprises are aggressively adopting blockchain, a common man is still confused between the two and how they will change the way he transacts today. Let this article clarify it all for you. «
A big cloud of confusion has been hovering over the new crypto enthusiasts – is bitcoin a blockchain or is blockchain a bitcoin?
Part of the confusion was created because we came to know about Bitcoin before we came across the blockchain. As both of them are closely related and a decade back bitcoin was the only application of blockchain, the terms were used loosely causing a lot of confusion which still persists.
Let us use the secondary school approach and begin with the definitions of Bitcoin and Blockchain before we chart down the differences for better understanding.
What is Bitcoin?
To keep it simple, Bitcoin or BTC as you must identify it with is one of the many crypto-currencies or digital currencies that is secured using cryptography. It was first transacted by its creator Satoshi Nakamoto in 2009 in pursuit of establishing an intermediary less financial system.
The essence of this new age currency is that nobody controls the issuance and generation of the currency. It is mined by distributed computer networks around the world using a consensus mechanism known as Proof of Work. Multiple nodes contend to solve the cryptographic problem used to secure the transaction. The node which does it first adds a transaction to the ledger and is incentivized with bitcoin or fraction of bitcoin.
Features of Bitcoin
What is Blockchain?
We chose to explain bitcoin prior to blockchain not because of any bias but as it is a known fact that most of the crypto users are familiar with bitcoin even if they don’t know what a blockchain is. Our last post from the “Know the Blockchain Series” Part -1 explains the blockchain basics at the granular level. So here we will keep it short.
What works behind the scenes of different kinds of cryptocurrencies are the blockchains.
Blockchain can be understood as a record-keeping ledger. It stores the details of all the transactions in an immutable manner and bitcoin uses one such blockchain framework to do keep a record of the transactions. The ledger is actually a decentralized network of computers that eliminates the need for a central authority and intermediaries.
Blockchain is made up of blocks of such transactional data in and the blocks are arranged in chronological order. Each block holds multiple transaction entries along with a cryptographic hash of the previous block and its current hash. It is the hash of the previous block in every consecutive block that renders immutability to the blockchain. If someone attempts to alter any entry of the blockchain, the hash will alter and would require the hash all subsequent blocks to be changes which is impractical.
Features of blockchain:
To Wrap – The Bitcoin protocol is built using a blockchain.
Wrapping our head around the difference between Bitcoin and Blockchain
Scope of adaption
Bitcoin is a blockchain with a specific intention to facilitate cross-border financial transactions without the presence of intermediaries like a bank. But blockchain is a ledger framework that can be used across any industry to maintain the entries of transactions of tokenized items whether it is money, gold, documents or securities.
While Bitcoin is a crypto-currency that offers speed and low-cost transfers because of its decentralized set up for financial transactions, blockchain is a ledger that intends to build a low-cost peer-to-peer transaction system for financial systems, supply chains and more.
Bitcoin is a set up that maintains the anonymity of the transactions. The identity of the parties is kept anonymous only thing a network participant can see is a particular amount of bitcoin was moved from an account (set of numeric codes) to another account (another set of numeric codes).
Blockchain is being used across multiple industries where different rules are being fabricated to make it compatible to record entries of a supply chain or KYC processing. A public blockchain is completely transparent to help establish a trustless ecosystem between the parties involved.
Bitcoin uses Proof of Work as the consensus mechanism while a blockchain may use any other kind of consensus (PoW, PoS). For certain blockchains, the focus may be to keep the transactions transparent and secure so the consensus mechanism of mining might not be fruitful. They can achieve privacy, security, and transparency by “selective endorsement.”
Asset class or cryptocurrency
Bitcoin is a cryptocurrency that uses blockchain to keep a record of the transactions while blockchain can be used to keep a record of assets, not essentially cryptocurrency. The assets can be tangible goods like food products, securities, auto parts to fortify the provenance systems or prevent frauds.
Both bitcoin and blockchain are gaining transaction as people are understanding the strengths of the technology. Healthcare, voting system, automotive services, and financial systems are already aggressively switching to private blockchain to streamline their supply chain or transaction maintenance without sacrificing the privacy and security of critical data. A blockchain has no intrinsic value like bitcoin as it only acts as a ledger to maintain the transactions in an immutable manner. We are not far from the adoption of cryptocurrencies like Bitcoin and blockchain backed supply chains for easier and more transparent daily lives. We at MARKNetwork are the strong protagonists of blockchain technology and are building solutions customized to address the routine security and privacy challenges across enterprises and various industries.
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