What's the difference between blockchain and Bitcoin?
Many people wrongly conflate the two. Do you know the difference?
Blockchain is the technology that underpins the cryptocurrency Bitcoin, but Bitcoin is not the only version of a blockchain distributed ledger system in the market. There are several other cryptocurrencies with their own blockchain and distributed ledger architectures.
Meanwhile, the decentralisation of the technology has also led to several schisms or forks within the Bitcoin network, creating offshoots of the ledger where some miners use a blockchain with one set of rules, and others use a blockchain with another set of rules.
Alongside the original Bitcoin, Bitcoin Cash, Bitcoin Gold and Bitcoin SV exist as their own cryptocurrency. With smaller networks, these cryptocurrency blockchains are more vulnerable to hacking attacks, one of which befell Bitcoin Gold in 2018.
The Bitcoin Origin Story
In late 2008, around the time of the financial crisis, a ground-breaking post appeared on a little-known internet forum entitled Bitcoin: A peer-to-peer electronic cash system. It was written by a mysterious person called Satoshi Nakamoto, a pseudonym used to disguise the author’s true identity.
Satoshi thought that the banks and governments had too much power that they used in their own self-interests. Satoshi envisaged a new type of money called Bitcoin that could change that: a cryptocurrency that wasn’t controlled or run by central banks or governments, that you could send anywhere around the world for free, with no person or institution in charge.
At first nobody paid attention to Satoshi’s wild ideas – but slowly more and more people started buying and using Bitcoin. Many believed it was the future of money, and the worse the big banks behaved the more popular it became.
Since it was formulated and launched in 2009, Bitcoin has grown to a network of around 10,000 “nodes” or participants which use the Proof of Work system to validate transactions and mine bitcoin.
This democracy prevailed until the development of specific mining computers called ASICs which overtook other less powerful machines, and companies began to profit from amassing miners and mining technology. It is still possible for an individual to take part in the Bitcoin process, but it is expensive to set up and the return on investment fluctuates with the highly volatile value of bitcoin itself.
Today, massive mining pools are owned or controlled by large corporations, and power is centralising again. This evolution has somewhat undermined Satoshi’s original vision for blockchain in which the "power” of participants was designed to be evenly distributed - but is now concentrated in the hands of half a dozen mining conglomerates.