The terms ‘blockchain’ and ‘bitcoin” have become buzzwords across multiple industries beyond IT and finance. The media has used the terms frequently in recent years to report stories on alternative investing as well as the emergence of decentralized digital transactions. Here’s a look at the differences between the two concepts.
Read on: Advantages of Using Blockchain Technology Across All Industries
Bitcoin Relies on Blockchain Technology
The main difference between blockchain and bitcoin is that blockchain is the underlying technology that facilitates digital transactions with bitcoin. In other words, bitcoin would not exist without blockchain. Typically, when capitalized, Bitcoin refers to the general concept of the technology and network. But when not capitalized, it likely means the specific asset with the U.S. ticker symbol BTC or the exchange in which it trades.
Bitcoin was the first of several cryptocurrencies, which are digital currencies that don’t require transactions through banks. Part of the excitement of all cryptocurrencies is the notion that items can be bought or sold online without going through a third party.
Blockchain technology was ushered in through bitcoin in 2008. Its creator, the mysterious Satoshi Nakamoto, devised a system for direct online transactions between buyers and sellers. Bitcoin was designed to be a finite system with a maximum of 21 million coins, each generated through algorithms that require expensive computing power.
Keep on reading: Risks and Benefits of Investing in Crypto
Blockchain technology is a series of locked digital blocks chained together. They contain private data that doesn’t have to involve financial transactions. Users of a blockchain network can only access private data with an encrypted key. So blockchain is considered an emerging robust cybersecurity solution.
Blockchain’s public dimension is that once a block is completed, it’s added to the chain where it’s visible to all network members. This visibility allows for members to verify transactions as part of a public ledger.
Crypto Investment Craze
There’s widespread confusion about crypto, except in the active cryptocurrency community, since it takes a while to explain. The story of bitcoin becoming a popular investment frenzy began in 2011 when the cryptocurrency started trading between buyers and sellers through crypto exchanges. It started out trading for pennies, but surpassed dollar value in 2011. By 2017, the value of one bitcoin surged from $900 to $20,000. It then crashed in 2018 after the big run-up, plunging below $6,000.
A resurgence in bitcoin developed in 2019, and by 2020 it was hitting new highs again. More volatility continued as the value in 2021 has ranged from under $30,000 to over $60,000. During this period, many large organizations announced support for bitcoin transactions. While it’s typically used for online gaming and digital downloads, it can be a convenient solution for making large online private transactions.
The Future of Blockchain and Bitcoin
The growing interest in bitcoin as an investment has stimulated curiosity in blockchain technology as a cybersecurity solution. As an investment, it’s unclear if government will regulate Bitcoin, which is a big reason it’s such a volatile rollercoaster for storing value. If governments let it continue with limited oversight, the value of Bitcoin can skyrocket. But regulations could scare away supporters who like the idea of decentralized currency.
Read more: Trends in FinTech That Are Here to Stay
The fact that bitcoin is used by cybercriminals for ransom darkens its appeal with government. Many ransomware attackers have demanded payments in bitcoin to conceal their identities. Early bitcoin activity before it went mainstream was on the black market, specifically Silk Road. Regardless of what happens with bitcoin, it appears blockchain is here to stay as part of the evolution of cybersecurity.
The rise of blockchain and bitcoin has captured the imaginations of tech enthusiasts and traders. It’s clear that both ideas are now woven into mainstream culture and are not just fleeting trends.