A mysterious digital currency was borne out of the blue one day and overnight, become an internet sensation. It was the first established cryptocurrency believed to be created by a pseudonymous software developer by the name Satoshi Nakamoto, whose real identity remains a mystery till date. No one even heard of the currency until people lost their valuable savings in the currency overnight leaving everybody surprises as nobody knew about the currency that appeared from nowhere. It wasn’t until the currency became official and made available to the public that people finally began to understand the significance of bitcoins.
What is a Bitcoin?
Bitcoin is an undeniably great invention that has come a long way since its inception. What emerged as the brainchild of Nakamoto has evolved into something much bigger than anybody would have anticipated. Every big thing begins with an idea. And the idea behind bitcoins was to free the people off the control of the government and to create a currency that could operate autonomously without a central bank. Bitcoins started as a bubble but soon become one of the most affluent digital currencies in the world.
What is a Blockchain?
Bitcoin owes its success to the Blockchain which begs the question – what is a Blockchain? It’s the technology that manages and documents Bitcoin transactions. Blockchain is a distributed network of computers and a global peer-to-peer payment system that guarantees integrity of transactions between the concerned parties. It’s a database of open records which document all transactions made with nut not limited to Bitcoins. It acts as a backbone of the prominent cryptocurrency that does not need any intermediaries and can function with many different leaders. This system allows anyone to be the decision-making authority unlike any other currency that would require a central authority.
Difference between Bitcoin and Blockchain
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Basics of Bitcoin and Blockchain
– Bitcoin is a cryptocurrency, a form of digital currency that operates outside the boundaries of a central authority and can be used for performing online transactions anonymously. It’s a digital payment system – a new type of currency – with no physical card involved that can be used to make payments to another individual or business.
Blockchain, on the other hand, is the technology behind Bitcoins which acts as a digital public ledger that holds and catalogues all the Bitcoin transactions. It’s a global peer-to-peer digital system that ensures the integrity of transactions between the two parties.
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Technology involved in Bitcoin and Blockchain
– Blockchain is the bigger picture of economic transactions. Originally devised for bitcoins, Blockchain is a growing list of records comprised of Bitcoin transactions but it has potential applications beyond Bitcoin and cryptocurrency. It’s a decentralized system that has properties of both decentralized and distributed paradigms.
-In simple terms, Blockchain is a digitized public ledger of all cryptocurrency transactions. Bitcoin is a cryptocurrency that uses Blockchain technology meaning every single Bitcoin transaction is stored and documented on a massive public ledger called the Blockchain.
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Decentralization of Bitcoin and Blockchain
– Bitcoin is a decentralized cryptocurrency that is not governed by a central authority or a central bank meaning every individual or business is guaranteed complete freedom from any kind of governing authority. It is a new way of making financial transactions or payments similar to what you do with your credit cards, but the transaction are made without any banks involved in the process.
Blockchain, on the other hand, is a technology that can be either centralized or decentralized. Although a Blockchain is inherently distributed, it is not necessarily decentralized.
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Transparency of Bitcoin Vs. Blockchain
– Bitcoin transactions are digitally sent by messages using the technology called peer-to-peer. Every time you wish to perform a transaction, Bitcoin generates a unique address which behaves like an Email and every transaction is protected through a distributed system called the Blockchain, which is a like a public record which stores all the transactions made through Bitcoin Wallet.
Every time you make a transaction, Bitcoin creates a new address. The identity of a user is protected by powerful cryptography and tracing a Bitcoin address to a user is nearly impossible.
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Function of Bitcoin and Blockchain
– Bitcoins are simply a digital token, more like a digital currency that allows you to purchase anything online anonymously, whereas Blockchain works as a distributed database for recording transactions which are not limited to Bitcoins. The ledger keeps record of every transaction processed, sort of like a confirmation that the transactions are made. These digital records of transactions are combined into “blocks” with each block representing a page of a ledger. Each block contains transaction data, a timestamp, and after each block is completed, it concludes a transaction and makes way for the next block.
Bitcoin vs. Blockchain: Comparison Chart
Summary of Bitcoin Vs. Blockchain
Bitcoin is a new digital currency unlike a physical coin which provides a new way of making financial transactions or payments online without the involvement of any central authority or central bank in the process. It’s a decentralized cryptocurrency with its own unit of currency called BTC, similar to USD unit for dollars in the United States.
Bitcoin transactions are protected by a peer-to-peer technology called the Blockchain, which is a public ledger holding records of all the transactions ever made through the Bitcoin wallets. Blockchain contains an evident record of each transaction made at any point in time.