Nowadays, there is a lot of buzz around bitcoin, cryptocurrency, and blockchain. Although these terms are interwoven as they are often used together for digital money, they mean different things.
Here, we will shed light on these terms, making it easy for you to understand their meanings, applications, and effects. So, let’s dive in.
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For a better understanding of these terms, we’ll start by defining blockchain. Blockchain is a technologically advanced means of storing different transactions so that they’re almost impossible to hack, change, or delete. This shows that it can be considered a digital ledger of information available on the whole network of systems.
It’s like a chain with numerous blocks. Every block has a plethora of transactions that can be viewed by all parties involved. When someone carries out a new transaction, it’s automatically added to the ledger. Although it’s most used for trading and distributing cryptocurrencies at the moment, its applications are vaster.
Some of the properties of this technology include:
● Programmable – Since blockchain involves the use of smart contracts, it can be programmed to function in a particular way.
● Distributed – Once a transaction has been carried out, all participants on the network will receive a copy of the transaction history. This distribution guarantees the utmost transparency.
● Anonymous – Even though people can know the number of participants in the network, their real identities are hidden. The identities can be either pseudonyms or anonymous
● Secure – Each transaction is encrypted; hence, it can’t be edited or erased by any participant. If a hacker wants to tamper with the system, he has to alter all blocks. Consequently, optimal security is guaranteed.
● Immutable – Nobody has the authority to reverse or change any transaction initiated on blockchain technology. If any change is made, every participant will be able to view it.
● Time-stamped – Another notable property of blockchain is its timestamp. This means that participants can view the date and time of day of each transaction.
● Unanimous – Every participant on a network agrees on the validity of each transaction. Nothing can be done or changed unless all participants agree.
Cryptocurrency is a form of digital currency made with cryptographic techniques and can be used for different transactions. Although its applications are similar to those of fiat money, it doesn’t require traditional financial institutions such as banks. With the aid of a peer-to-peer method, anyone can transfer money regardless of their location.
One of the unique features of digital currency is that it doesn’t require physical money. So, you don’t have to carry anything around before completing transactions in the real world. Everything is done digitally through a digital wallet that stores your crypto assets.
Numerous cryptocurrencies are available today. The popular ones include Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and Dogecoin (DOGE). Although these virtual currencies can be used for several, their applications are currently limited. This is because many organizations and people still don’t accept them for a lot of transactions.
In addition, cryptocurrencies don’t have any specific intrinsic value. You can’t use it to redeem other commodities. Nevertheless, you can convert or trade your crypto to fiat money. For instance, you can do BTC USD trading without any hassle.
It’s noteworthy that cryptocurrency relies on blockchain technology. Hence, transactions involving digital currencies enjoy all the properties of this outstanding technology.
Bitcoin
Last but not least, let’s talk about bitcoin. Simply put, bitcoin is just one of the various types of cryptocurrencies available on different exchanges today. However, it’s the first and most popular digital coin. To use this virtual currency, you don’t need the help of a bank or other conventional financial institutions.
Historically, it was created and made public by Satoshi Nakamoto in 2008. The transactions involving bitcoins are available on a public ledger. This means that everyone can access the transactions whenever and wherever they want.
At inception, each bitcoin was only worth around $1. Its value has changed a lot due to the volatile nature of cryptocurrencies. However, it rose to about $68,900 at the end of 2021. Over the next few months, the value fell below $20,000.
Despite its fluctuating price, bitcoin remains the most valuable digital coin. At the moment, we’ve over 19 million bitcoins available for different transactions.
With the information above, you now have a good understanding of the meanings of blockchain, cryptocurrency, and bitcoin.
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