What is the difference between bitcoin and blockchain?
Are Bitcoin and blockchain a similar thing? No, they aren’t. Be that as it may, they are firmly related. At the point when Bitcoin was released as open source code, blockchain was wrapped up together with it in a similar arrangement. What’s more, since Bitcoin was the main use of blockchain, people often inadvertently used “Bitcoin” to mean blockchain. That’s how the misunderstanding started. Blockchain technology has since been extrapolated for use in different ventures, but there is still some lingering confusion.
How are Bitcoin and blockchain different?
Bitcoin is a sort of unregulated digital currency that was first created by Satoshi Nakamoto in 2008. Otherwise called a “cryptocurrency,” it was launched with the goal to bypass government currency controls and simplify online transactions by getting rid of third-party payment processing intermediaries. Obviously, achieving this required something other than the cash itself. There must be a secure method to make transactions with the cryptocurrency.
Bitcoin transactions are put away and transferred utilizing a distributed ledger on a peer-to-peer network that is open, public and anonymous. The blockchain is the underpinning technology that keeps up the Bitcoin transaction record.
How does the Bitcoin blockchain work?
The Bitcoin blockchain in its simplest form is a database or record contained Bitcoin transaction records. In any case, since this database is distributed over a peer-to-peer network and is without a central authority, network participants must agree on the validity of transactions before they can be recorded. This agreement, which is known as “consensus,” is achieved through a process called “mining.
After someone uses Bitcoins, miners engage in complex, resource-intense computational equations to verify the legitimacy of the transaction. Through mining, a “proof of work” that meets certain necessities is made. The proof of work is a bit of information that is costly and time-consuming to produce but can easily be verified by others. To be considered a valid transaction on the blockchain, an individual record must have a proof of work to show that consensus was achieved. By this design, transaction records cannot be tampered with or changed after they have been added to the blockchain.
How is blockchain for business different?
The blockchain that supports Bitcoin was developed specifically for the cryptocurrency. That’s one of the reasons it took a while for people to realize the technology could be adapted for use in other areas. The technology also had to be modified quite a bit to meet the rigorous standards that businesses require. There are three main characteristics that separate the Bitcoin blockchain from a blockchain designed for business.
Assets over cryptocurrency
There is an ongoing discussion about whether there is value in a token-free shared ledger, which is essentially a blockchain without cryptocurrency. I won’t weigh in on this debate, but I will say this: blockchain can be used for a much broader range of assets than just cryptocurrency.
Identity over anonymity
Bitcoin thrives due to anonymity. Anyone can look at the Bitcoin ledger and see every transaction that happened, but the account information is a meaningless sequence of numbers. On the other hand, businesses have KYC (know your customer) and AML (anti-money laundering) compliance requirements that require them to know exactly who they are dealing with. Participants in business networks require the polar opposite of anonymity: privacy.
Selective endorsement over proof of work
The consensus in a blockchain for business is not achieved through mining but through a process called “selective endorsement.” It is about being able to control exactly who verifies transactions, much in the same way that business happens today. If I transfer money to a third party, then my bank, the recipient’s bank and possibly a payments provider would verify the transaction. This is different from Bitcoin, where the whole network has to work to verify transactions.
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