Beginners are often confused and frustrated when it comes to understanding the difference between Bitcoin and blockchain. It’s a new and very different type of technology and these key terms are frequently used interchangeably, even by the “expert” talking heads on TV, which just makes people even more confused.
They’re very wrong to use them in place of one another as they’re distinct, different things. Bitcoin is not Blockchain and if you’re ever wanting to buy Bitcoin or even just understand it at all, it’s vitally important you know what the difference is between them. Otherwise you’ll constantly get scammed and make mistakes because you don’t have a solid foundation of understanding.
So let’s break down the key differences between these terms simply and quickly.
Bitcoin vs Blockchain: The Key Differences
What’s the key difference between Bitcoin and Blockchain? Let’s explain it simply:
|First and most globally recognised digital cryptocurrency||The technology used by Bitcoin and other cryptocurrencies|
|Allows people to buy goods and services without the need for a centralised trusted third party like banks or central banks||Is a shared database or file that’s stored on computers around the world and contains transaction information grouped into blocks|
|Transactions are recorded on a decentralised ledger called a blockchain||Each block is “chained” to the last block|
|This blockchain is stored on a network of tens of thousands of computers all around the world||Keeps track of who owns what tokens or coins on the network|
What Is Bitcoin?
Bitcoin is the first and most globally recognised cryptocurrency. That means it’s a digital currency backed by maths and cryptography, rather than by a single country or government.
It’s free for anyone in the entire world to own and you can use it by sending or receiving it with other people just like any other money. Unlike fiat money though, it cannot be stopped or censored and its rules cannot be changed, no matter how rich or powerful a country or person is.
People use Bitcoin to buy and sell goods and services just like they would with other currencies using a special program called a Bitcoin Wallet. Bitcoin has its own special properties and can do things those other currencies can’t.
For example, Bitcoin can be sent to anyone, anywhere in the world within a few minutes even if they have no bank account or are using a different currency than you are. We cover a lot more in our piece on Bitcoin For Beginners.
What Is Blockchain?
In order to keep track of who owns what tokens or coins, cryptocurrencies use what’s called blockchain technology. This is also referred to as a distributed ledger so if you’ve been wondering what the difference between blockchain and distributed ledger is, there isn’t any, they’re the same thing.
A blockchain or distributed ledger is essentially just a big database or file that is constantly updated to show who owns what. For example it might say “Bill owns 1 bitcoin”.
When a transaction is broadcast on the Bitcoin network and ownership of various coins changes hands, it’s bundled together into a “block”. This block is then added or “chained” onto all the existing ones. All these individual blocks, chained together, forms the blockchain. There is only one Bitcoin blockchain. While anyone can copy the existing one, the Bitcoin network would reject it as invalid.
If you’d like to learn more about Blockchains and how they are “mined” then have look at our super deep piece on What Is Bitcoin Mining?
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Blockchain vs Cryptocurrency
These two terms are often spoken about interchangeably as well, which again leads to a lot of confusion about the difference between blockchain and cryptocurrency, but they’re two very different things.
|The technology used by Bitcoin and other cryptocurrencies||A currency that is digital only, with no physical real world presence (like a $5 note)|
|Is a shared database or file that’s stored on computers around the world and contains transaction information grouped into blocks||Secured using cryptography to prevent counterfeit or double-spending|
|Each block is “chained” to the last block||Not issued by a central authority such as a central bank|
|Keeps track of who owns what tokens or coins on the network||Uses distributed ledger technology, typically called a blockchain|
Each cryptocurrency has their own separate blockchain to keep track of their own separate transactions and Bitcoin is the first and biggest cryptocurrency.
Wider Blockchain Applications
In 2017, the word “Blockchain” was so over hyped that companies saw their share price increase by over 400% – in a single day! – simply by adding the word to their company name. People with no clue thought it was the next greatest thing since the Internet. Needless to say, they got rekt.
At its heart a blockchain is just a database that’s copied onto multiple computers all around the world. This makes it much less efficient and slower than having one, central database. But. It has the benefit of making it decentralised. As such, if you can use a normal, centralised database to accomplish your task or App and don’t need it to be decentralised, then using “Blockchain” likely isn’t a good idea.
For Bitcoin, the whole point is to remove trusted third parties and centralised authorities, so using a traditional database isn’t possible. This is why Bitcoin has to use a blockchain, even though it’s not as efficient or fast.
Many companies have tried to use blockchain technology for other applications like voting systems or storing medical data and some show promise. However it’s still too early to tell whether there are other solid use cases for blockchains beyond Bitcoin.
If you have other questions about Bitcoin and Blockchain let us know in the comments below, otherwise tell us if you can think of any other great blockchain applications that we haven’t mentioned.
Is Bitcoin A Blockchain?
No. Bitcoin is the first and most globally recognised digital cryptocurrency. Blockchain is the technology used by Bitcoin and other cryptocurrencies to store the transactions that get sent over the network.
Is Crypto And Bitcoin The Same?
No. There is Bitcoin and then the descriptive word Cryptocurrency. There are many thousands of cryptocurrencies out there under the general category of “cryptocurrency” and Bitcoin is just one example. Ethereum is also another type of Cryptocurrency.
Read more: There’s Bitcoin And Literally Everything Else.
What Blockchain Is Bitcoin On?
Each cryptocurrency has its own special blockchain. As such, Bitcoin only uses the Bitcoin Blockchain and nothing else.
Does Bitcoin Use Blockchain?
Yes. Blockchain is a fundamental part of Bitcoin and all cryptocurrencies. It’s responsible for storing all the transactions that happen on the network and ensuring that they are available to all participants at all times.
Does Bitcoin Have Its Own Blockchain?
Yes. Each cryptocurrency has its own special blockchain and Bitcoin only uses the Bitcoin Blockchain.
Do You Need Bitcoin For Blockchain?
No. Blockchain is the technology used by Bitcoin and other cryptocurrencies to store transaction information, so Bitcoin isn’t needed for blockchain as other cryptocurrencies also use the same technology. At its heart a blockchain is simply a shared database and you can use it to store any information such as medical records.
What Is The Difference Between Blockchain And Coinbase?
Blockchain is a core technology used by Bitcoin and other cryptocurrencies to store transaction information in a shared and decentralised way.
Coinbase is a private company and Centralised Exchange (CEX) that allows you to buy, sell and trade cryptocurrencies. To use their services you are required to give them all your private information which violates your Bitcoin Privacy and is a serious security risk. Instead we recommend only using non-KYC, Decentralised Exchanges (DEX) such as Bisq.