Bitcoin, blockchain and cryptocurrency are the buzzwords these days. These are terms that are often used interchangeably but are in reality quite different concepts. Bitcoin is a digital currency visualized as an alternative method of payment. Blockchain is a type of distributed ledger that powers Bitcoin.
This article will clear up the difference between the two for you and answer various questions like is Bitcoin equal to blockchain and is Bitcoin and cryptocurrency the same thing.
What is Bitcoin?
Bitcoin is a cryptocurrency powered by blockchain technology. An anonymous developer Satoshi Nakamoto launched it in 2009 as a digital alternative to conventional fiat currencies like the US Dollar.
As Bitcoin is not controlled by a third party, it relies on a peer-to-peer network to confirm transactions and add new blocks to the chain. It uses the SHA-256 hashing algorithm to encrypt the information contained in the blocks.
Bitcoin is the most popular and the most valuable cryptocurrency to date. Its popularity has spurred the creation of a number of altcoins such as Ether, Litecoin and Dogecoin though none of them have been able to reach the level of Bitcoin.
Practical Applications of Blockchain Technology
Although blockchain technology’s most significant and visible application has been in cryptocurrencies, it actually has use cases in various industries and sectors.
Cryptocurrency
The most obvious use of blockchain technology has been in the development of cryptocurrency. It is a decentralized virtual currency that is free from the control of any central agency.
All transactions on the crypto network are permanent and no one can reverse them. Cryptocurrency is secured using a technology called cryptography which makes it immutable and secure. Bitcoin is the most famous example of such cryptocurrencies.
Energy
In the energy sector, blockchain technology is used to streamline access to renewable energy. It is also being used to develop peer-to-peer energy trading platforms. Such platforms can be used to facilitate the sale of electricity between individuals. Blockchain-based crowdfunding initiatives are used to help communities access and own solar panels.
Banking and Finance
Integrating blockchain technology can improve the efficiency of the banking sector. It facilitates fast, secure and cheap cross-border transfers by reducing the number of intermediaries needed for the process. The capital market can also benefit from using blockchain for faster transaction settlements and operational improvements.
Supply Chain Management
Blockchain helps to reduce the possibility of supply chain disruptions due to unexpected events. It provides businesses with near real-time visibility into operations enabling them to make fast decisions. Additionally, the use of blockchain increases transparency in the organization by giving participants greater visibility across the supply chain.
Healthcare
Blockchain can come in handy to safely store patients’ medical information. It helps healthcare organizations maintain an immutable record of the relevant information and they can also restrict data access to certain participants in the network. Blockchain can also be used to track the supply chain journey of pharmaceutical products.
Insurance
While it may not look like it, blockchain can actually help optimize workflows and improve overall efficiency in the insurance industry. This can be done by managing claims in a transparent and secure manner with blockchain. It can help in minimizing disputes and increasing brand trust.
Real Estate
Blockchain can be used to reduce fraud in this sector. It ensures more transparency during the sale and purchase process and also expedites the sale process. Blockchain can also be utilized to eliminate the need for scanning documents or tracking them down in the local recording office.
Voting
Blockchain has the potential to eliminate election fraud and encourage greater voter turnout. It can be helpful in ensuring transparency in the election process and making it nearly impossible to tamper with the votes. The technology can prove to be economical in the long run as it reduces the number of personnel required to conduct elections and count votes.
What are the Differences Between Bitcoin and Blockchain?
Many people wonder about the Bitcoin vs. blockchain difference. Let us go over them one by one.
Nature
Bitcoin is a cryptocurrency which is something envisaged as a digital payment method for goods and services. It is a decentralized virtual alternative to fiat currencies. Blockchain is a distributed database whose primary purpose is to keep a record of information that is shared among all the nodes on a network.
Scope
Blockchain has a wider scope than Bitcoin. The latter is simply a virtual currency that is largely used for investment and speculation purposes. On the other hand, blockchain can be effectively used in diverse sectors such as banking, healthcare, government and supply chain.
Motive
Blockchain’s key motive is transparency. It is a public ledger where anyone can join the network and view the information stored in the blocks. Bitcoin, meanwhile, offers anonymity. Transfers can be made with it without revealing the identity of either the payer or the payee.
Flexibility
Blockchain is quite flexible and can adapt quickly to any changes in different industries. Bitcoin is less flexible as it focuses on reducing the time taken to settle transactions as well as lowering the cost of influencers.
Transfers
As Bitcoin is a cryptocurrency, it only supports currency trading and money transfers. Contrastingly, blockchain powers various cryptocurrencies but can also be used to transfer stocks, property rights and contracts.
Is Bitcoin Equal to Blockchain?
No, Bitcoin is not equal to blockchain. Although they are interrelated and the two terms are often used interchangeably, Bitcoin and blockchain are actually different concepts.
Blockchain is a distributed database or ledger whose primary purpose is to function as a store of information. It has use cases in several industries and cryptocurrency particularly Bitcoin is simply one example of the practical application of blockchain technology. It was launched as an alternative payment system but is now seen as a lucrative financial instrument for both short and long-term investments.
Therefore, while blockchain and Bitcoin are interconnected concepts, there are wide differences between the two that prove that Bitcoin is not equal to blockchain.