If you thought that Blockchain and Bitcoin are the same things, you are not the only one who’s confused about them. Probably, blockchain and bitcoin are so closely related.
What is the difference between blockchain and bitcoin?
Blockchains are computer files used to store data. Or, in more technical terms, it is an open distributed ledger (database), which means that the data contained in the blockchain is distributed (replicated) across multiple computers and is therefore decentralised. Blockchain is the technology that underpins Bitcoin, and it was developed specifically for Bitcoin. So, Bitcoin is the first example of a blockchain, and without a blockchain, there would be no Bitcoin. This is why the two names are often used interchangeably. But that doesn't mean blockchain and bitcoin are the same thing.
Bitcoin is a decentralised digital currency, or peer-to-peer electronic payment system, where users can transfer Bitcoin anonymously without interference from third-party institutions such as banks or governments. However, Bitcoin is just one example of a cryptocurrency; other cryptocurrency networks are also powered by blockchain technology. So while Bitcoin uses blockchain technology to trade digital currencies, blockchain is more than just Bitcoin.
The key differences between Blockchain and Bitcoin
Finally, let's review why blockchain and Bitcoin are two completely different things:
- Bitcoin is a cryptocurrency whereas blockchain is a distributed database.
- Bitcoin is powered by blockchain technology, but blockchain has found many uses outside of Bitcoin.
- Bitcoin is about anonymity, while blockchain is about transparency. To be applied in certain industries (especially banking), blockchain must meet strict know-your-customer rules.
- While Bitcoin transfers money between users, blockchain can be used to transfer a variety of things, including information or property ownership.
Are Public Blockchain and Private Blockchain the same?
Blockchain technology was first proposed in 1991 by two mathematicians, Stuart Haber and W. Scott Stornetta, who wanted to implement a system where document timestamps cannot be tampered with. In the late 1990s, Cypherpunk Nick Szabo proposed the use of blockchain to secure a digital payment system called Bit Gold (which was never implemented). The number of live blockchains is growing at an ever faster rate every day. As of 2022, there are over 10,000 active blockchain-based cryptocurrencies, and hundreds of non-cryptocurrency blockchains.
A public blockchain, also known as an open or permissionless blockchain, is a blockchain where anyone is free to join the network and establish a node. Because of their open nature, these blockchains must be secured using consensus systems such as cryptography and proof-of-work (PoW).
On the other hand, private or permissioned blockchains require every node to be approved before joining. Because nodes are considered trusted, the security layer does not need to be that robust.
Hope this article helps you to know that the differences between Blockchain and Bitcoin and also private blockchains and public blockchains are not the same thing.
