Home > Crypto 101 > Bitcoin vs Blockchain: What Is The Difference? >

Bitcoin vs Blockchain: What Is The Difference?

Author: Jeffrey Craig Date: July 25, 2022

Bitcoin and blockchain are among the first words any crypto investor comes across. And along with cryptocurrencies, Ethereum, and the metaverse, are among the two most popular investment themes in the past three years. However, there’s also a lot of mysticism, misunderstanding, skepticism, and doubt about Bitcoin and blockchain, especially when it comes to understanding their investment value and practicality as a real-world technology solution.

Bitcoin vs Blockchain

What Is Blockchain?

Blockchains are essentially electronic ledgers. Their entire purpose is to record transactions. In terms of cryptocurrencies, any time a coin is transferred, a permanent record of this action is securely added to a blockchain. Governments, businesses, and individuals also use and maintain ledgers for a variety of purposes. So what then differentiates blockchains from these traditional ledgers?

The most significant difference is that of decentralization. While the examples mentioned above involve a single specific entity that has control over all records, it’s quite the opposite for blockchains. There simply isn’t any one single person or institution that oversees these transactions. Instead, all participants, regardless of their location, have a copy of and help maintain the virtual ledger.

In other words, every person that chooses to participate in this system becomes a network node. As such, they provide computing power to help verify, maintain, and secure transactions. Combined with cryptographic processes, blockchains are a much more secure and tamper-resistant option than their traditional counterparts.

If you want to learn more about Blockchain, check out What is Blockchain?

What Are The Different Types Of Blockchains?

There are also different types of blockchains, such as public blockchains, private blockchains, consortium, and permissioned.

Public blockchains are those that everyone in the world may view and send transactions to. Common public blockchains include Ethereum and Bitcoin, and they’re consensus mechanisms include Proof-of-Stake and Proof-of-Work, hence, they’re completely decentralized and don’t require personal identification information to participate in the network.

There are also private blockchains that are managed by a single entity. XRP, Ripple is an example of a private blockchain. The third, consortium blockchains are set up by a consortium of organizations rather than a single institution. Lastly, are permissioned blockchain networks, which are set up by businesses that create a private blockchain.

All in all, there are too many blockchains to count, but the major ones in the cryptocurrency space are layer 1 blockchains which include Bitcoin, Ethereum, Cardano, Avalanche, and Solana, and many Web3 startups choose to build their applications on top of these blockchains, rather than in centralized app stores like Android or iOS.

Should You Invest In Blockchain?

Global spending on blockchain is expected to grow to $19 billion by 2024, in 2020 this number was at $4.5 billion. So this alone shows how investment and spending around blockchain has skyrocketed. Moreover, global businesses are also investing in blockchain and distributed ledger technologies. Regarding the hottest use case for blockchain, the financial sector accounts for over 30% of the market value, however, the market for blockchain is quickly spreading to sectors like agriculture and healthcare.

So given blockchain’s proliferation and how businesses plan to invest in the technology, it’s also reasonable that individual investors follow suit, whether that be financial services, cryptocurrencies, Web3 infrastructures, decentralized applications, or supply chain and healthcare. Blockchain in a few years will touch every sector and market.

What Is Bitcoin?

Bitcoin is the first and most popular cryptocurrency ever created, based on it we develop Bitcoin trading and Bitcoin Futures and all other derivatives we can see now. It was designed to be anonymous, decentralized, and secure. To achieve its goals, the virtual currency uses blockchain technology at its core.

As mentioned above, each time a Bitcoin is transferred or moved, the transaction is recorded on the blockchain. Participants around the world offer their computing power to help secure and record these transactions. As a reward for their help in maintaining the system, these ‘miners’ receive newly generated Bitcoins.

The result of this system is an online currency that can instantly be shared all over the world. Users can remain anonymous as all they need is a computer, a virtual wallet, and an internet connection. In addition, because of its decentralized nature, there is no government that can control the supply of this currency.

Check out our Academy post to learn about the benefits of Bitcoin: What is Bitcoin?

Should You Invest In Bitcoin?

Since reaching an ATH in November 2021 at around $69,000, Bitcoin has slowly declined to a current price of just over $20,000. This is because a multitude of factors such as bad institutional crypto investors, macro economic slowdown, high inflation, and rising interest rates. However, Bitcoin is no longer stuck at the stage it was during 2017/2018, where it was purely speculative. There are real use cases, and many more investors viewing the asset as digital gold. Moreover, the number of Bitcoin addresses has steadily increased over the years, and more and more young investors are learning about Bitcoin and choosing to invest in it over traditional stocks and commodities. Given this, Bitcoin can be a long-term investment, but as with all cryptocurrencies, it’s still a volatile asset that should be invested and traded responsibly.

Key Takeaways:

  • Bitcoin is a decentralized, anonymous, virtual currency.
  • Bitcoin uses blockchain technology to securely record transactions .
  • Blockchains are virtual ledgers maintained by users all over the world.
  • Blockchains are also decentralized and employ cryptography to remain secure.

For any inquiries contact us at support@phemex.zendesk.com
Follow our official Twitter | Join our community on Telegram
Trade crypto on the go: Download for iOS | Download for Android
Phemex | Break Through, Break Free
start trading start trading start trading

Register On Phemex Now To Begin Trading

Register On Phemex

More Articles

What Makes a Trustworthy Crypto Exchange

What Makes a Trustworthy Crypto Exchange

Alan W. | February 9, 2023

Crypto Vesting and Cliffs

Crypto Vesting and Cliffs

Alan W. | December 12, 2022

Subscribe Phemex

Get The Latest News And Updates From Phemex!

Get The Latest News & Updates!