Did you know that blockchain and Bitcoin aren’t the same thing? If you’ve been using the terms interchangeably, you’re not alone; plenty of people do the same thing, probably because blockchain and Bitcoin are so closely related.
If you’ve ever scratched your head wondering what on earth is the difference between the two, this article is for you.
What is blockchain?
In super-simple terms, a blockchain is a computer file for storing data. Or, to put it in more technical jargon, it’s an open, distributed ledger (database), which means the data contained within the blockchain is distributed (duplicated) across many computers and is therefore decentralised.
This decentralisation is one of the things that makes blockchain so transformative. Unlike in a traditional, centralised database – where records are processed by one central administrator (say, a company or government) – the entire blockchain is transparent and data is verified by user consensus. Yet, despite this transparency, blockchains are incredibly secure. That’s because there’s no one central point of attack for hackers to target.
Decentralised. Distributed. This sounds a bit like Bitcoin…
You’re spot on! Blockchain is the technology that underpins Bitcoin and it was developed specifically for Bitcoin. So, Bitcoin was the first example of blockchain in action and without blockchain, there would be no Bitcoin. That’s why the two names are so often used interchangeably.
But that doesn’t mean that blockchain and Bitcoin the same thing.
Bitcoin is a decentralised digital currency, or peer-to-peer electronic payment system, where users can anonymously transfer bitcoins without the interference of a third-party authority (like a bank or government). Bitcoin is just one example of a cryptocurrency, though; other cryptocurrency networks are also powered by blockchain technology. So although Bitcoin uses blockchain technology to trade digital currency, blockchain is more than just Bitcoin.
Looking at the wider applications of blockchain
Because blockchain and Bitcoin are so inextricably linked, it took people a long time to realise that blockchain actually has much wider applications beyond cryptocurrency networks. In fact, blockchain’s potential is so great that many people (myself included) believe the technology will revolutionise the way we do business, just like the internet did before it.
Here are just a few examples of the wider applications of blockchain beyond Bitcoin and other cryptocurrencies:
A quick summary of the key differences
To finish up, let’s recap why blockchain and Bitcoin are two completely separate things:
Where to go from here
If you would like to know more about blockchain and its applications in business, check out my articles on:
Bernard Marr is an internationally bestselling author, futurist, keynote speaker, and strategic advisor to companies and governments. He advises and coaches many of the world’s best-known organisations on strategy, digital transformation and business performance. LinkedIn has recently ranked Bernard as one of the top 5 business influencers in the world and the No 1 influencer in the UK. He has authored 16 best-selling books, is a frequent contributor to the World Economic Forum and writes a regular column for Forbes. Every day Bernard actively engages his almost 2 million social media followers and shares content that reaches millions of readers.