I’m sure you have heard about Bitcoin. A digital asset booming the world of currency and finances by it’s achievements to touch unbelievable highs and drastic lows.
Whenever you hear about Bitcoin there is also a B-word following it. The word is Blockchain. Many people believe that they’re one and the same which is disastrously wrong. It’s like considering the chicken and egg to be the same thing.
This misconception is really common and needs to be understood in order to understand Bitcoin, Blockchain and the entire world of cryptocurrency.
Let’s consider Blockchain first.
Blockchain is something that stores encrypted blocks of data then chains them together to form a singular source. It is a duplicated and distributed digital ledger consisting blocks of information (transactions). It is an extremely secure way of recording data that makes it impossible to alter, change or cheat the system.
Now, let’s talk about Bitcoin.
Bitcoin is the best known cryptocurrency. Cryptocurrency is a medium of currency exchange like the Indian Rupee or the Dollar, but cryptocurrencies are digital.
In fact, Bitcoin is the cryptocurrency for which the Blockchain technology is invented. Yes, Blockchain is the technology on which cryptocurrencies like Bitcoin function.
But how does the Blockchain technology work so efficiently that it functions a $1 trillion global market?
The operation starts when someone requests a transaction.
The request is broadcasted to a peer-to-peer network that consists of computer systems called nodes.
The network of nodes validates the user’s status and the transaction using some known algorithms.
A verified transaction would consist cryptocurrency, contracts, records and other information.
Once the transaction is verified, it is combined with other transactions to create a new block of data for the digital ledger.
The newly made block is then added to the existing Blockchain in a way that is permanent and unalterable.
The transaction update is distributed across the network.
Once the network is updated of the transaction, the transaction is considered complete.
Now, the most important factor is that cryptocurrency is a type of digital currency that works on Blockchain I.e. the above mentioned process.
On an adjacent factor, cryptocurrency are all but a digital currency while Blockchain on the other hand has a lot more potential application. Blockchain is also considered as a type of next-gen business improvement software. It has the potential to improve the business processes between companies which can radically lower the “cost of trust”.
This will open a gateway to significantly higher returns for each dollar invested as compared to most traditional internal investments.
The future of Blockchain and Bitcoin or any other cryptocurrency walks different paths even though they walk hand in hand.
Blockchain holds a possibility to speed up the growth of technology and innovation.
Want to learn more about Blockchain and Bitcoin? Check out our amazing and insightful series on Blockchain by the Founder of India’s Blockchain Alliance, Mr. Raj Kapoor. Go take a look only on TECHVED TV.