Did you know that Bitcoin (BTC) price gained 10% on December 18 and crossed the $7,200 level? Some sources talked about a $2 billion Chinese crypto scam that could have affected Bitcoin prices. Xi Jinping, president of the Republic of China, is targeting crypto exchanges in the country. Also, the People’s Bank of China is working to close down these exchanges. On the other hand, Xi Jinping hopes to poise China as a leader in blockchain.
Do not mistake China’s stand on blockchain and Bitcoin. The Chinese are working to integrate the technology but do not want the digital currency in the economy. Blockchain is not a currency like Bitcoin. It is the technology that makes cryptocurrencies like Bitcoin possible. China’s goal is to be a leader in blockchain while banning virtual currency trading in the country.
Bitcoin versus blockchain: An introduction
Generally, many people feel that blockchain and Bitcoin are synonymous. But, fundamentally, both are worlds apart. In simple words, Bitcoin is a currency that you can own trade, purchase, or invest in. This is not something you can do with a blockchain. On the other hand, blockchain is a technology that powers the Bitcoin network as well as supports all digital currencies.
All the countries around the world are trying to adopt blockchain tech. On the contrary, many countries across the globe have banned Bitcoin.
Bitcoin and blockchain: An example
Blockchain is the technology and pitting it against a virtual currency is not a fair comparison. Their functionalities might overlap, but that is where you draw the line. For a better understanding, you could compare blockchain and Bitcoin together with the combination of AI (Artificial Intelligence) and robotics.
AI is a technology that is very important while building robots. But AI is not a robot in itself. A robot is useful to perform routine day to day activities. But the robot functions within a pre-defined set of rules or has AI. In other words, the functioning of a robot relies on AI. In the same way, Bitcoin (or any other virtual currency for that matter) is a digital currency. It could prove useful for day-to-day transactions. However, the functioning of the digital currency relies on blockchain technology.
What is blockchain?
Blockchain is a radical technology that has the potential to change the enterprise approach to business. Do you remember when the internet was in a nascent stage, a concept still gaining people’s approval? You could say that blockchain tech today is what the internet was during the early nineties.
Blockchain makes it possible to record, execute, and maintain a database for transactions in a decentralized network. It is highly scalable and could encompass the whole globe in a single interface. Also, it relies on a DLT (distributed ledger technology). The data storage takes place in ledger form and spread across all the computers in the network. Every new transaction among the network participants gets added to the blockchain and updated in all the individual copies of the ledger.
Blockchain networks function on decentralized network topology. It means that there is no central server that is responsible for handling all the data. Each system is independent and has the same level of authorization. Peers in the network are responsible for updating the transactions and validating the deal in the distributed ledger. They are called miners.
In the network, data blocks serve as the information warehouse. Every new activity keeps adding in these blocks in an encrypted format. New blocks are regularly added to the network and linked to the previous one to form a chain of blocks. This is how the technology got the name blockchain.
History of blockchain tech
The concept of blockchain technology originated back in 1991. The idea was to create a system where the records, once entered, are immutable. Timestamps served as an indicator for this purpose. After adding the transaction in the blockchain, the network takes note of the date and time for this activity. Any attempt to modify the transaction will result in a change in the timestamp, and the network structure will get disrupted. In short, it is impossible to change any data the blockchain or it is tamper-proof. The first application of this technology was in 2008 to create the cryptocurrency Bitcoin.
What is a cryptocurrency?
Let’s dispel the myth about cryptocurrency. As the name suggests, it is a currency that is cryptographically secured, hence the name cryptocurrency. There are no physical or tangible aspects to it, and it is in an entirely digital format. Unlike other forms of currency, like paper and plastic money, virtual currencies allow direct transactions between two parties. It could potentially eliminate the need for an intermediary like banks and payment platforms. Also, it could drastically reduce costs like agent fees, bank charges, et cetera. Additionally, since the transaction is a peer-to-peer transfer, it is much faster than…