Blockchain underpins Bitcoin, the cryptocurrency. However, it is not the only distributed ledger system based on blockchain technology. Other cryptocurrencies have their distributed ledger architectures and their own blockchain.
Meanwhile, the technology’s decentralization has resulted in multiple schisms or forks inside the Bitcoin network, resulting in offshoots of the ledger in which some miners use a specific set of rules on a blockchain and others use a blockchain with a different set of rules.
Bitcoin Cash, Bitcoin Gold, and Bitcoin SV are all separate cryptocurrencies from the original Bitcoin. Because these cryptocurrency blockchains have smaller networks, they are more vulnerable to hacking assaults, such as the one that hit Bitcoin Gold in 2018.
Bitcoin is a decentralized digital currency that was first introduced in January of 2009. It is based on ideas presented in a white paper by Satoshi Nakamoto, a mysterious and pseudonymous figure. 12 The identity of the individual or people behind the technology is still unknown. Bitcoin promises reduced transaction fees than existing online payment methods, and it is run by a decentralized authority, unlike government-issued currencies.
Blockchain vs Bitcoin
Blockchain is the technology that underpins Bitcoin, and it was created with Bitcoin in mind. As a result, Bitcoin was the first application of blockchain, and Bitcoin would not exist without it. As a result, the two names are frequently confused.
That does not, however, imply that blockchain and Bitcoin are synonymous.
Bitcoin is a peer-to-peer electronic payment system that allows users to send bitcoins anonymously without the need for a third-party authority. However, Bitcoin is only one type of cryptocurrency; blockchain technology is also used in other cryptocurrency networks. Although Bitcoin trades digital currency using blockchain technology, blockchain is more than simply Bitcoin.
Blockchain beyond Bitcoin
Since Bitcoin and blockchain are so closely linked, it took a long time for people to realize that blockchain can be used for much more than money networks. Indeed, the potential of blockchain is so immense that many people (including myself) believe it will revolutionize our business methods and techniques, much like the internet did before it.
Smart contracts – We already know that blockchain is wonderful for facilitating digital transactions thanks to Bitcoin, but smart contracts may also be used to formalize digital relationships. A smart contract allows automated payments to be released whenever the contract terms have been met, saving time and perhaps reducing differences or resolving disputes.
Auditing supply chain – Users can use blockchain to track the ownership of commodities all the way back to the source. De Beers, a diamond firm, has begun to use blockchain to track diamonds from the mine to the final client as an example. Anyone who wishes to ensure that their diamonds are conflict-free will have access to an open and comprehensive record.
Providing insurance proof – The Nationwide Insurance Company intends to employ blockchain technology to deliver proof-of-insurance data. The application would allow police officers, insurers, and customers to instantaneously verify insurance coverage, potentially speeding up the claims process.
Summary of differences
- Blockchain is a distributed database, while Bitcoin is a cryptocurrency.
- Blockchain technology underpins Bitcoin, but it has a wide range of applications.
- Anonymity is promoted by Bitcoin, whereas transparency is promoted by blockchain. Blockchain must comply with strong Know Your Customer standards in order to be used in some industries (especially banking).
- Bitcoin is used to transmit money between users, whereas blockchain may be used to transfer anything from information to property ownership rights.