Bitcoin started out as an unregulated digital currency first created by Satoshi Nakamoto in 2008. Also known as a “cryptocurrency,” it was launched with the intention to bypass government currency controls and simplify online transactions by getting rid of third-party payment processing intermediaries. Unlike traditional currencies, Bitcoin uses blockchain technology and encryption techniques to control the creation of coins or monetary units. Bitcoin and blockchain are often used interchangeably, but they are not the same thing. Bitcoin is an application of blockchain technology. Think about Google and the internet. Google runs on the internet and wouldn’t run without the internet. In the same way, Bitcoin runs on the blockchain and this allows it to transparently record a ledger of payments. Blockchain, however, can be used to immutably record any number of data points.
What is Bitcoin?
Bitcoin is a decentralized digital currency that you can buy, sell, and exchange directly without an intermediary like a bank. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.
Although Satoshi Nakamoto intended Bitcoin to be used as a medium of exchange, Bitcoin today has taken on the role of a speculative instrument more than anything else.
What is Blockchain?
Blockchain seems complicated, and it definitely can be, but its core concept is really quite simple. A blockchain is, at its simplest, a database or a computer file for storing data. Data contained within the blockchain is distributed across many computers and is therefore decentralized. Blockchain technology was first outlined in 1991 by two researchers, Stuart Haber and W. Scott Stornetta. They wanted to enable a system in which document timestamps could not be interfered with. But it wasn’t until January 2009, nearly two decades later, that blockchain had its first real-world application in Bitcoin.
Bitcoin Vs Blockchain
- Bitcoin is a digital currency, whereas blockchain is a distributed ledger.
- Bitcoin runs on blockchain technology, but blockchain has applications beyond Bitcoin.
- Bitcoin promotes anonymity, while blockchain’s most prominent feature is transparency.
- Bitcoin transfers currency between users, while blockchain can be used to transfer a wide range of things, including information or property ownership rights.
Blockchain Pros And Cons
- Blockchain can transform the data space for businesses forever. Its weak points are eliminated in most cases because of its distributed capabilities.
- Blockchain enables fast and secure exchanges of data and finances. Agreements can be instantly executed with the help of the technology’s distributed capabilities.
- The quality of data stored in a blockchain is superior.
- Blockchain allows you to record transactions with accuracy and eliminates human error, and protects data from being tampered with.
- Blockchain technology consumes a lot of power.
- Blockchain ledgers can grow very large over time. The Bitcoin blockchain currently requires around 200 GB of storage.
- As blockchain technology decentralizes all transactions, there will be no regulator like the central bank. Sometimes, a regulator is necessary in cases of lost funds or theft.
- It is very difficult to modify data that has already been added to the blockchain.
Bitcoin Pros And Cons
- Bitcoin is very accessible. You can buy it from any crypto exchange at any point in time.
- Bitcoin has high liquidity.
- As an instrument, Bitcoin tends to peak at extremely high prices, which means it has the potential for high returns.
- Compared to other digital payment methods, such as credit cards and PayPal, Bitcoin comes with lower transaction fees.
- Bitcoin’s built-in privacy protections allow users to completely separate their Bitcoin accounts from their legal identities.
- Bitcoin is not as widely accepted as traditional currencies. There are only so many things you can buy with Bitcoin.
- There’s a risk of losing your earnings if your files are corrupted.
- Bitcoin has seen more than its fair share of medium-specific scams, fraud, and attacks.
- Bitcoin transaction speed and fees tend to vary depending on mining efficiency and network congestion.
- Users affected by transaction fraud – for instance, they purchase goods that the seller never delivers – can’t request a refund through Bitcoin.
If you’ve been using Bitcoin and Blockchain interchangeably, you’re not alone. Plenty of people do the same thing, probably because Bitcoin works on Blockchain’s principle. Bitcoin and Blockchain are closely related but different. When Bitcoin was first released, Blockchain was a part of the package. And since Bitcoin was the first use case of blockchain, people often inadvertently used “Bitcoin” to mean blockchain. That’s how the misunderstanding began. Blockchain technology has since been extrapolated for use in other industries. For instance, in the public sector, blockchain technology can be used to store public health records and land registries and guarantee secure identity management. Nowadays, Bitcoin is known as a good investment option. Check out Bitcoin Trader to earn more profit from Bitcoin trading. It is an automated trading platform that focuses on making profit from Bitcoin.