Every digital information must be recorded as well as distributed, this was the aim when blockchain was invented. This might be difficult to grasp in the first place. So let us discover and understand how the first application of blockchain technology actually started.
THE BACK STORY:
Stuart Haber and W. Scott Stornetta sketched the blockchain technology back in 1991 for the very first time for the implementation of timestamps without alterations.
It was just 2 decades later when blockchain showcased its real-world application- BITCOIN in Jan 2009.
WORKING:
The protocol which Bitcoin used was built on Blockchain. Pseudonym creator of Bitcoin SATOSHI NAKAMOTO introduced it as “a new electronic cash system that’s fully peer-to-peer, with no trusted third party”, in the white paper published by him.
Unlike fiat currencies which are regulated and authenticated by a central authority, usually a bank or government, the cryptocurrencies (like BItcoin in this scenario) are regulated and authenticated by a network of computers called Nodes.
Each time a person spends his/her Bitcoin to buy a commodity the computers on that Bitcoin network authenticate his/her transaction. At that time the user runs a program in order to solve a mathematical problem known as a hash to get his/her transaction verified on the Bitcoin network.
As soon as the hash problem gets solved, the algorithm simultaneously authenticates the block’s transactions. After that, the transaction is recorded publicly and stored as a block on the blockchain. Once recorded on the blockchain, the transactions are unalterable.
The miners who work to mine the hash, get rewarded with cryptocurrency for successful validation.
It is important to note that all the transaction details are publicly recorded on the blockchain but the user information is not. To conduct transactions on the bitcoin network, one uses “wallets”. The details of the owner of the wallet are not stored on the blockchain. To access this wallet, one needs to have its public and private keys.
To learn more about Public Kry and Private Key, stay tuned for our next Blog, Public Key VS Private Key.
BLOCKCHAIN IN A NUTSHELL
Blockchain is basically an open secure ledger that helps in transactions between peers.
This makes Bitcoin’s blockchain as Bitcoin’s ledger. Today Blockchain has evolved and is efficient enough to cater even the smallest transactions across varied industries.
BITCOIN IN A NUTSHELL
Bitcoin is a cryptocurrency which was basically derived from the Blockchain technology. The main purpose of its invention was to boost cross border transactions and to decrease the governments’ control over the transactions thereby simplifying the entire process, without any type of involvement from the 3rd party intermediaries.
Although it is not formally accepted yet people across the planet are using it willingly for several kinds of transactions. The fact that unlike fiat currency it’s not tangible makes it intriguing.
Both Blockchain and Bitcoin are interrelated terms. While Blockchain is the technology behind Bitcoin, Bitcoin in itself is just one of the several things that blockchain can do.
Let us take a few minutes to understand the key difference between Blockchain and Bitcoin:
- Adaptability is one of the key differences between Blockchain and Bitcoin. While looking at Bitcoin one see something that is rigid and just focuses on cross border transactions. Whereas a Blockchain has evolved itself with improvement over the years and is now catering to a hoard of industries not limited to the financial sector.
- Bitcoin is used for cross border transactions and to decrease the charges as well as the time of that transaction. While Blockchain works as a distributed ledger that allows peer to peer transactions in a safe environment. Blockchain also makes the transactions public and promoted transparency.
Blockchain And Bitcoin – Final Thoughts
Both bitcoin and blockchain have their own strengths. While Blockchain is the technology Bitcoin is based on; Bitcoin is the first and key element derived from a blockchain. In this digital age, it is certain that more and more people looking to get the advantage of bitcoin and blockchain.
Bitcoin and other altcoins like Ethereum, Feelium, Litecoin, etc. are gaining prominence in cross-border transactions. But blockchain technology has more applications in different sectors like Banking, Cybersecurity, Music Industry and more.
