Get the weekly summary of crypto market analysis, news, and forecasts! This Week’s Summary The crypto market ends the week at a total market capitalization of $2,17 trillion. Bitcoin continues to trade at around $62,300. Ethereum experiences no changes and stagnates at around $2,400. XRP is down by 2%, Solana by 1%, and Dogecoin by 3%. Almost all altcoins are trading in the red, with very few exceptions. The DeFi sector decreased the total value of protocols (TVL) to around…
What Are the Major Differences between Blockchain and Bitcoin?
1.6 k views
Marius Bogdan Dinu
@bdinu89
Over the years, cryptocurrencies have been a hot topic worldwide. Also, many people invested heavily in digital assets, generating millions of dollars in return. As a result, the crypto industry has developed into a trillion-dollar market.
Nevertheless, many people still need help to enter crypto due to its many confusing terms. For instance, some need to learn the differences between blockchain and Bitcoin. And who can blame them?
Bitcoin is a cryptocurrency but also a blockchain. However, the blockchain is not necessarily Bitcoin.
This truth, so easy to grasp for crypto experts, escapes the neophytes. And, if you are new to cryptocurrencies, you are right to feel like you need clarification. But don’t worry! We are here to clear the air and ease your first steps into the cryptosphere.
Read on to discover how Bitcoin is different from the blockchain and vice-versa!
What is Blockchain?
The term “blockchain” refers to a decentralized network that stores its copy in real-time on multiple computers, a.k.a. nodes. Generally, it acts as an open-source ledger, meaning anyone can connect and contribute to it.
Blockchain is a technological breakthrough because it allows the storage and sharing of information conveniently and securely. Also, it is immutable, meaning it only records data other nodes consider accurate. And, once it validates it, the data join the chain in a “block” that no one can alter or hack.
One of the unique features of blockchain is its decentralized nature that originates from its ledger technology. Only one central authority can manage the records in the centralized and traditional financial industry. On the other hand, blockchain transactions are transparent without compromising security, and user consensus verifies the data. So, the need for intermediaries or third parties disappears.
Blockchain technology is older than cryptocurrencies. For instance, its story started sometime in 1991, almost two decades before the first crypto asset, Bitcoin, surfaced. Today, the blockchain is the ideal environment for trading and developing cryptocurrencies.
Blockchain consists of three components:
Blockchain Blocks
Blocks are the central and most critical parts of blockchain technology. For instance, they are responsible for carrying out all the appropriate information regarding a particular transaction. Also, each blockchain contains a unique nonce and hash stored chronologically and linearly at the end of the chain. Therefore, the more the chain increases, the more challenging it gets to reverse, disrupt, or manipulate it.
Blockchain Miners or Validators
Miners or Validators are responsible for creating the blocks that constitute the blockchain. Mining in blockchain technology is exceptionally complex. For example, the miners are responsible for confirming and recording new transactions and creating new cryptocurrencies. The mining process adds new blocks to the existing blockchain and ensures accurate transactions.
Blockchain Nodes
Another vital part of blockchain technology is its node system. For instance, nodes are responsible for validating each batch of transactions. A node in the world of cryptocurrency refers to a computer connected to the world of cryptocurrency. This machine facilitates several functions, including creating, sending, and receiving information on the blockchain network.
Thanks to blockchain nodes, no organization can own blockchain technology. Also, no one can compromise its integrity and privacy through the unsystematic or systematic informational exchange.
What Is Bitcoin?
Bitcoin was the first cryptocurrency to appear on blockchain technology in 2009. Its developer(s) goes by Satoshi Nakamoto, a pseudonym that has yet to be deciphered. This person or group published Bitcoin: A peer-to-peer electronic cash system on a small internet forum. The document details blockchain technology and Bitcoin as alternatives to a decaying traditional financial system.
According to Nakamoto, governments and banks had too much control of the financial industry. This means that they can manipulate it for their interests. So instead, he visualized a new kind of currency that these central authorities could not control or dictate.
At first, many people did not believe such a currency could exist. But, with time, more and more people started to buy Bitcoin. Furthermore, the more the banks and other traditional financial institutions opposed this currency, the more popular it became.
Bitcoin is a peer-to-peer payment system that runs on blockchain technology, which is decentralized in nature. In turn, this virtual currency provides low fees and more secure transactions than other traditional and popular payment methods.
How Does Bitcoin Work?
If you want to mine or invest in bitcoin, you must first have a Bitcoin wallet. The next step is to find software to receive, send, and store funds more securely. The software is downloadable on any PC, smartphone, or portable device. Currently, more than 11,500 nodes use the Proof of Work system to mine bitcoins and verify transactions.
Bitcoin mining involves the use of special computers and ASICs. In turn, industry-leading companies invest in such mining technology, employ Bitcoin miners, and profit from it. Nevertheless, individual miners can still take part in Bitcoin mining. Unfortunately, it is more expensive to earn a considerable profit due to the highly volatile crypto market.
Today, large corporations control and own massive bitcoin mining pools. This means that Bitcoin’s mining power is slowly reaching centralization. In turn, this evolution is undermining the original Bitcoin blueprint.
Since Bitcoin is a virtual currency, it goes without saying that it does not have a physical form. Instead, it uses a unique mathematical algorithm that secures a string of numbers stored in a private and public key.
The private key is similar to an ATM pin, while public keys refer to a bank account number. Lastly, Bitcoin is divisible to eight decimal places, with the smallest unit being the Satoshi.
Blockchain vs. Bitcoin
As we mentioned earlier, many people need clarification on the terms ‘blockchain’ and ‘Bitcoin.’ However, the significant differences between these two terms include the following:
Blockchain is the underlying technology for many cryptocurrencies, including Bitcoin. Its role is to enable anonymous and secure transactions across various digital platforms.
While Bitcoin functions on anonymity, blockchain works using a transparent mechanism.
Bitcoin is only a value store and medium of exchange between virtual currencies. On the other hand, blockchain has more uses, such as transferring digital assets, proprietary information, and rights, among many others.
Lastly, the blockchain aids in executing smart contracts as they automatically release agreements on the platform. Therefore, this technology helps maintain a transparent audit supply chain and records system while offering proof of insurance.
Conclusion
Btc
Bitcoin
$62.547
price
price
0.84959%
price change
Blockchain technology and Bitcoin payments will soon experience mainstream adoption. As more and more companies embrace these new concepts, many believe they will soon replace traditional forms of payment. Lastly, they will change how we perform transactions, making them more secure and easier to use.
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Marius Bogdan Dinu
@bdinu89
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