It is fairly unusual for individuals to mix up the terms blockchain and Bitcoin. Since Bitcoin was the first well-recognized blockchain application, it has managed to disrupt the public perception of blockchain technologies.
And no, Bitcoin and blockchain are exactly not the same things.
If you often happen to interchange Bitcoin and blockchain, you are not alone. It is part of learning since you just started hopping into the crypto industry. That is why this article serves you as a guide regarding how Bitcoin is related to blockchain. Are you ready? Let us start with knowing Bitcoin’s origin!
Bitcoin and the mysterious Satoshi Nakamoto
Satoshi Nakamoto, Blockchain, and Bitcoin are all familiar names that are changing the way we think about global currencies. Satoshi Nakamoto presented Bitcoin to the world on October 31, 2008, at the height of the financial crisis. On a cryptography email list, he uploaded a paper titled Bitcoin: A Peer-to-Peer Electronic Cash System. This drew a lot of attention, and there was a lot of discussion about it.
Nakamoto outlined Bitcoin’s idea as decentralized, digital money in these publications. As explained by Cointelegraph, the process of distributing and dispersing authority away from a central location is referred to as decentralization. In the traditional mainstream world, most financial and governmental institutions are centralized, which means they are governed and administered by a single entity.
The Bitcoin program was released to the general public in 2009. It started mining, which is the process of creating new Bitcoins and transacting them on the network.
So, what makes Bitcoin decentralized?
The decentralized nature of Bitcoin is enabled by the network’s underlying blockchain technology, which allows any user to become one of the network’s numerous payment processors. A blockchain is a form of distributed ledger that divides data into blocks or groupings of data when it is added to the ledger. Because each block can only store so much data, new blocks are added to the ledger regularly, establishing a chain.
A distributed ledger, sometimes called a shared ledger, is a database that is shared by consensus across various locations and regions over a peer-to-peer (P2P) network without the need for a central authority.
More about Bitcoin and Blockchain…
As mentioned earlier, blockchain is the technology that supports Bitcoin and was created with Bitcoin in mind. So, Bitcoin was the first illustration of blockchain in operation, and Bitcoin would not exist without blockchain.
The blockchain of Bitcoin is open to the public, which means that anybody who possesses Bitcoin may see the transaction history. While tracing the identity of an account might be challenging, the record reveals which accounts are transacting on the blockchain.
However, this only applies to Bitcoin and other select cryptocurrencies. Blockchain can also be designed as private ledgers, which may have a smaller pool of participants compared to public ledgers.
If you are curious, here is how Bitcoin transactions are verified and recorded using blockchain:
- During the process, Bitcoin’s decentralised network of nodes sends transaction data.
- Nodes verify the transaction.
- If a node’s data contains an error, it can correct itself by referencing the thousands of other nodes.
- Following acceptance, the transaction is combined with others to form a block, which is then added to an ever-growing transaction chain.
- Each block of Bitcoin’s blockchain contains an irreversible history of transactions, meaning the finalised block is already encrypted.
Started from Bitcoin’s foundation, but now, blockchain is spreading its potential across different industries.
Besides supporting giant cryptocurrencies like Bitcoin and Ethereum, blockchain has developed significantly in the previous decade and is expected to continue to do so. More governments are starting blockchain projects and using this technology to ensure their systems’ trust, transparency, and security. Some of the wider applications of blockchain beyond Bitcoin are smart contracts, healthcare records, property records, supply chains, and more.
Q: Hmm, I would like to begin my Bitcoin trading career. What should I do first?
Bitcoin trading offers a lot of benefits, but it also has a lot of drawbacks, one of which is the risk of losing money. Maintain your interest in cryptocurrencies and undertake further study to have a better understanding of them. Careful research and due diligence are important initial steps to getting yourself prepared. Once you are ready, you can look up accurate and beginner-friendly trading platforms to make your Bitcoin trading career even more exciting!
